SC 13D/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-l(a) AND AMENDMENTS THERETO FILED PURSUANT

TO RULE 13d-2(a)

(Amendment No. 3)*

Bluefly, Inc.

(Name of Issuer)

Common Stock, Par Value $0.01 Per Share

(Title of Class of Securities)

096227103

(CUSIP number)

Jeffrey I. Martin, Esq.

152 West 57th Street, 23rd Floor

New York, NY 10019

(212) 751-6677

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

August 13, 2012

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box  ¨.

(Continued on the following pages)

(Page 1 of 16 Pages)

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

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1.	NAMES OF REPORTING PERSONS Rho Ventures VI, L.P.
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     WC
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,601,306
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,601,306
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,601,306
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.60% (1)
14.	TYPE OF REPORTING PERSON     PN

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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1.	NAMES OF REPORTING PERSONS Rho Capital Partners LLC
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     AF
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,601,306
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,601,306
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,601,306
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.60% (1)
14.	TYPE OF REPORTING PERSON     OO

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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1.	NAMES OF REPORTING PERSONS RMV VI, L.L.C.
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     AF
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,601,306
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,601,306
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,601,306
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.60% (1)
14.	TYPE OF REPORTING PERSON     OO

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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1.	NAMES OF REPORTING PERSONS Joshua Ruch
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     AF
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Republic of South Africa and United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,601,306
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,601,306
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,601,306
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.60% (1)
14.	TYPE OF REPORTING PERSON     IN

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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1.	NAMES OF REPORTING PERSONS Habib Kairouz
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     AF
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Canada and United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,617,887
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,617,887
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,617,887
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.66% (1)
14.	TYPE OF REPORTING PERSON     IN

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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1.	NAMES OF REPORTING PERSONS Mark Leschly
2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3.	SEC USE ONLY
4.	SOURCE OF FUNDS     AF
5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)    ¨
6.	CITIZENSHIP OR PLACE OF ORGANIZATION     Kingdom of Denmark
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER     11,601,306
		8.	SHARED VOTING POWER     0
		9.	SOLE DISPOSITIVE POWER     11,601,306
		10.	SHARED DISPOSITIVE POWER     0
11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     11,601,306
12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11     40.60% (1)
14.	TYPE OF REPORTING PERSON     IN

(1) Assumes that there are 28,576,612 shares of common stock, par value $0.01 per share, of Bluefly, Inc. outstanding, as reported in the Quarterly Report on Form 10-Q of Bluefly, Inc., filed with the Securities and Exchange Commission on August 14, 2012.

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Introduction

This Amendment No. 3 to Schedule 13D (this “Amendment No.3) amends the Statement on Schedule 13D filed on December 28, 2009, as amended by Amendment No. 1 to Schedule 13D filed on February 26, 2010 and Amendment No. 2 to Schedule 13D filed on September 7, 2011, and is being filed by Rho Capital Partners LLC, a Delaware limited liability company (“Rho Capital”), RMV VI, L.L.C., a Delaware limited liability company (“RMV”), Rho Ventures VI, L.P., a Delaware limited partnership (“Rho Ventures”), Joshua Ruch, Habib Kairouz and Mark Leschly (together, the “Reporting Persons”) and relates to their beneficial ownership of shares (the “Shares”) of common stock, par value $0.01 per share (the “Common Stock”), of Bluefly, Inc., a corporation organized under the laws of the state of Delaware (the “Issuer”).

ITEM 4. Purpose of Transaction.

December 2009 Securities Purchase Agreement

On December 21, 2009, Rho Ventures and the Issuer entered into a Securities Purchase Agreement (the “December 2009 Purchase Agreement”) pursuant to which Rho Ventures agreed to acquire from the Issuer (i) 2,786,337 shares of Common Stock at a purchase price of $1.70 per share (the “Initial Shares”) at an initial closing on December 21, 2009 (the “Initial Closing”) and (ii) 6,037,192 shares of Common Stock at a purchase price of $1.70 per share (the “Remaining Shares”) at a second closing (the “Second Closing”) scheduled to occur no later than three trading days following the requisite approval (the “Stockholder Approval”) of the issuance of the Remaining Shares by the Issuer’s stockholders (the “Second Closing Date”). The Stockholder Approval occurred on February 23, 2010. The Second Closing occurred on February 25, 2010. The source of funds for the purchase at the Initial Closing and the Second Closing was the working capital of Rho Ventures.

September 2011 Securities Purchase Agreement

On September 7, 2011, Rho Ventures and the Issuer entered into a Securities Purchase Agreement (the “September 2011 Purchase Agreement”) pursuant to which Rho Ventures acquired from the Issuer 2,777,777 shares of Common Stock at a purchase price of $1.80 per share (the “2011 Shares”) at a closing that took place on the same date (the “2011 Closing”). The source of funds for the purchase of the 2011 Shares was the working capital of Rho Ventures.

August 2012 Note and Warrant Purchase Agreement

On August 13, 2012, Rho Ventures and the Issuer entered into a Note and Warrant Purchase Agreement (the “August 2012 Purchase Agreement”) pursuant to which Rho Ventures purchased from the Issuer a secured convertible subordinated promissory note in an aggregate principal amount of $1,500,000 (the “Note”) and a warrant to acquire 476,190 shares of Common Stock at an exercise price of $1.05 per share (subject to adjustment in the event of stock splits, stock dividends, reclassifications and the like) (the “Warrant”), which Warrant may be exercised at the option of Rho Ventures for cash or on a cashless basis until August 13, 2019. The conversion of the Note and the exercise of the Warrant, in each case, into equity securities of the Company, is subject to the prior receipt by the Issuer and the effectiveness of the requisite approval of the Issuer’s stockholders of the issuance of such equity securities (the “2012 Stockholder Approval”). Pursuant to the terms of the August 2012 Purchase Agreement, each of the Investors party thereto (including Rho Ventures) has agreed to vote or cause to be voted all shares of the Issuer’s voting stock that are beneficially owned by such Investor (or its Affiliates) or over which such Investor has or shares voting control in favor of the 2012 Stockholder Approval and has agreed to deliver a duly executed written consent of stockholders within ten days of the closing of the transactions contemplated by the August 2012 Purchase Agreement.

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The August 2012 Purchase Agreement contains customary representations and warranties. In connection with the issuance of the Note, the Issuer, Rho Ventures and certain of the Issuer’s other creditors entered into an Intercreditor Agreement, dated August 13, 2012 (the “Intercreditor Agreement”), whereby the parties thereto established lien priority, relative rights and other creditors’ rights matters with respect to the Note and the Issuer’s other outstanding indebtedness. The source of funds for the purchase of the Note and Warrant was the working capital of Rho Ventures.

The Note bears interest at an annual rate equal to 12% per annum, with interest accruing on a cumulative, compounding basis. The Note matures on the earliest to occur of (i) August 13, 2013, (ii) a change of control of the Issuer (as defined therein) and (iii) the date on which the Issuer consummates a debt or equity financing resulting in proceeds to the Issuer of at least $7,500,000 (the “Maturity Date”). The Note is secured by certain assets of the Issuer and its subsidiaries as set forth under the Note and the Intercreditor Agreement.

Prior to the Maturity Date, immediately following the Issuer’s consummation of the offer and sale for cash of its equity securities resulting in proceeds to the Issuer of at least $7,500,000 (the “Subsequent Financing”), and subject to the prior receipt and effectiveness of 2012 Stockholder Approval, Rho Ventures has the right, at its option to convert all of the outstanding principal and interest of the Note (the “Principal Obligations”) into a number of fully paid and nonassessable equity securities sold in the Subsequent Financing equal to the quotient obtained by diving the aggregate amount of Principal Obligations to be converted by the lowest price paid by any investor in the Subsequent Financing (the “Subsequent Financing Securities”). In addition, at any time and from time to time prior to the Maturity Date, and subject to the prior receipt and effectiveness of 2012 Stockholder Approval, Rho Ventures has the right, at its option, to convert all or any portion of the Principal Obligations into a number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by diving the aggregate amount of Principal Obligations to be converted by $1.05.

Events of default under the Note include, among others, payment defaults, covenant defaults, and certain bankruptcy-type events involving the Issuer. Upon an event of default, the outstanding Principal Obligations shall be accelerated and Rho Ventures shall, at its option, have the right, subject to the Intercreditor Agreement, to require the Issuer to pay the outstanding Principal Obligations.

Registration Rights Agreement

Shelf Registration Statement

In connection with the December 2009 Purchase Agreement, Rho Ventures entered into a Registration Rights Agreement, dated December 21, 2009 (the “December 2009 Registration Rights Agreement”), with the Issuer and certain existing holders of Common Stock (the “Existing Holders”). In connection with the acquisition by Rho Ventures of the 2011 Shares, Rho Ventures entered into an Amended and Restated Registration Rights Agreement, dated September 7, 2011 (the “Amended and Restated Registration Rights Agreement”). The Amended and Restated Registration Rights Agreement terminated all registration rights granted under the December 2009 Registration Rights Agreement and replaces the December 2009 Registration Rights Agreement in its entirety. Under the Amended and Restated Registration Rights Agreement, the Issuer was required to file a “shelf” registration statement (the “Shelf Registration Statement”) covering the Shelf Registrable Securities (which included the 2011 Shares) held by the Shelf Holders (as such terms are defined in the Amended and Restated Registration Rights Agreement) no later than November 15, 2011. The Shelf Registration Statement was filed by the Issuer on November 14, 2011 and was declared effective by the U.S. Securities and Exchange Commission on February 7, 2012. The Amended and Restated Registration Rights Agreement also obligates the Issuer to maintain the effectiveness of the Shelf Registration Statement and the previously filed “shelf” registration statement covering the Initial Shares and Remaining Shares until all securities covered by such registration statements are sold or otherwise can be sold pursuant to Rule 144 without any restrictions.

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Piggy-Back Registration

Under the Amended and Restated Registration Rights Agreement, if the Issuer registers any securities in an underwritten public offering, Rho Ventures and the Existing Holders will have the right to include their shares in the registration statement, subject to customary exceptions. The underwriters of any underwritten offering will have the right to limit the number of such shares that may be registered.

Demand Registration

The Amended and Restated Registration Rights Agreement also provides that, at any time, subject to certain exceptions, Rho Ventures has the right to demand on no more than two occasions that the Issuer file a registration statement (a “Demand Registration Statement”) within 45 days, covering the offering and sale of the Demand Registrable Securities (as defined in the Amended and Restated Registration Rights Agreement). The Issuer is not obligated to effect more than two Demand Registration Statements at the request of Rho Ventures, effect more than one Demand Registration Statement in any six month period or effect any Demand Registration Statement if the aggregate offering price is less than $10 million.

The Issuer may delay the filing of a Demand Registration Statement under specified conditions, such as for a period of time while the Issuer pursues an underwritten public offering if its board of directors (the “Board”) deems it advisable to delay such filing. Such postponements cannot exceed 120 days from the date of the notice from the Issuer.

The Issuer will pay all registration expenses, other than underwriting discounts and commissions, related to the Issuer’s performance of the Amended and Restated Registration Rights Agreement. The Amended and Restated Registration Rights Agreement contains customary cross-indemnification provisions. The registration rights granted under the Amended and Restated Registration Rights Agreement have no expiration date.

Under the August 2012 Purchase Agreement, Rho Ventures is entitled to registration rights in respect of the shares of Common Stock or the Subsequent Financing Securities issuable upon conversion of the Note and the Common Stock issuable upon exercise of the Warrant, in each case, consistent with the registration rights granted pursuant to the Amended and Restated Registration Rights Agreement, as set forth in the August 2012 Purchase Agreement.

Voting Agreement

In connection with the December 2009 Purchase Agreement, Rho Ventures entered into an Amended and Restated Voting Agreement, dated December 21, 2009 (the “Voting Agreement”), with the Issuer and the Existing Stockholders (as defined in the Voting Agreement), pursuant to which Rho Ventures and the Existing Stockholders agreed to vote their shares of Common Stock to effect the restructuring of the Board such that the Board shall consist of ten members consisting of three classes with staggered terms, as further specified in the Voting Agreement (the “Board Restructuring”). The Board Restructuring was approved on February 23, 2010 and was implemented on the Second Closing Date. In addition, pursuant to the Voting Agreement, (i) Rho Ventures has the right to designate two designees to serve on the Board and the Issuer agreed to cause such designees to be nominated for election at meetings of the stockholders called for the purpose of electing directors (or in connection with any written consent of stockholders in lieu thereof) and (ii) the Existing Stockholders have the right to designate an aggregate of four designees, as specified in the Voting Agreement. The Issuer also agreed in the Voting Agreement to appoint the designees of Rho Ventures and the Existing Stockholders to certain committees of the Board. Pursuant to this right, Rho Ventures has designated Habib Kairouz as its representative on the Board.

Under the Voting Agreement, Rho Ventures and the Existing Stockholders agreed that at any meeting or action by written consent of stockholders at which or pursuant to which directors of the Issuer are to be elected, Rho

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Ventures and such Existing Stockholders will vote all shares of the Issuer’s capital stock owned by them in favor of the designees of Rho Ventures and the designees of the Existing Stockholders. In addition, Rho Ventures agreed that, if Rho Ventures disposes of its capital stock of the Issuer such that Rho Ventures owns less than the greater of (i) 28% of the stock owned by Rho Ventures after the Second Closing, or (ii) the minimum amount required under Nasdaq rules to allow Rho Ventures to designate two of its allotted Board designees, then Rho Ventures must cause one director designated by Rho Ventures to resign from the Board. Rho Ventures also agreed that, if Rho Ventures disposes of its capital stock of the Issuer such that Rho Ventures owns less than the greater of (i) 14% of the stock owned by Rho Ventures after the Second Closing, or (ii) the minimum amount required under Nasdaq rules to allow Rho Ventures to designate one of its allotted Board designees, then Rho Ventures must cause each of the directors designated by Rho Ventures to resign from the Board. The Existing Stockholders agreed to similar restrictions with respect their Board designees.

In addition, Rho Ventures and the Existing Stockholders were subject to “lock-up” provisions pursuant to which they could not, without the Issuer’s prior written consent, sell, hypothecate, pledge or otherwise transfer any shares of the Issuer’s capital stock, directly or indirectly, including through any derivative transaction, or publicly announce an intention thereof, which “lock-up” period with respect to Rho Ventures expired on the one year anniversary of the date of the Initial Closing.

Lock-Up Agreements

In connection with the 2011 Closing, Rho Ventures entered into a Lock-Up and Support Agreement, dated September 7, 2011 (the “Lock-Up and Support Agreement”), with the Issuer and the Stockholders (as defined in the Lock-Up and Support Agreement) pursuant to which Rho Ventures and the Stockholders may not, without the prior written consent of (i) the Issuer and (ii) each of the purchasers of Common Stock under the September 2011 Purchase Agreement (the “Purchasers”), sell, hypothecate, pledge or otherwise transfer any shares of the Issuer’s capital stock, directly or indirectly, including through any derivative transaction, or publicly announce an intention thereof, which “lock-up” period with respect to Rho Ventures remains in effect until the one year anniversary of the date of the 2011 Closing. The Lock-Up and Support Agreement further provides that, in any circumstances upon which a vote, consent or other approval (including by written consent) is sought with respect to the Stockholder Approval Condition, each Stockholder will vote the shares of the Issuer’s capital stock held by it, other than the shares acquired under the September 2011 Purchase Agreement, in favor of the ballot item necessary to satisfy the Stockholder Approval Condition.

Each director of the Issuer, including Habib Kairouz, and the Issuer’s chief executive officer, chief financial officer and chief operating officer executed a Lock-Up Agreement, dated September 7, 2011 (the “Lock-Up Agreement”), in favor of the Issuer and each Purchaser, pursuant to which such directors and officers of the Issuer may not, without the prior written consent of (i) the Issuer and (ii) each Purchaser, offer, pledge, announce the intention to sell, sell, contract to sell, or otherwise transfer or dispose, including through any derivative transaction, any shares of the Issuer’s capital stock, which “lock-up” period with respect to Mr. Kairouz remains in effect until the earlier of the one year anniversary of the date of the 2011 Closing or until he ceases to be a director of the Issuer.

The foregoing descriptions of the December 2009 Purchase Agreement, the September 2011 Purchase Agreement, the Amended and Restated Registration Rights Agreement, the Voting Agreement, the Lock-Up and Support Agreement, the Lock-Up Agreement, the August 2012 Purchase Agreement, the Note, the Warrant and the Intercreditor Agreement (collectively, the “Agreements”) do not purport to be complete and are qualified in their entirety by the terms of each such document, which are attached hereto as Exhibit 2, Exhibit 3, Exhibit 4, Exhibit 5, Exhibit 6, Exhibit 7, Exhibit 8, Exhibit 9, Exhibit 10 and Exhibit 11 respectively, and are incorporated herein by reference.

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As a result of the arrangements described above, including, but not limited, to the Voting Agreement, the Lock-Up and Support Agreement and the August 2012 Purchase Agreement, the Reporting Persons and the Existing Stockholders may be deemed to comprise a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, although neither the fact of this filing nor any of the information contained herein shall be deemed to be an admission by the Reporting Persons that a “group” exists.

The Reporting Persons take no responsibility for any filings made by the Existing Stockholders or the completeness or accuracy of any information contained therein.

Except as set forth herein, the Reporting Persons do not have any contracts, arrangements, understandings or relationships with respect to any securities of the Issuer.

Additional Disclosure

The Initial Shares, Remaining Shares, the 2011 Shares, the Notes and the Warrants were acquired solely for investment purposes. Rho Ventures does not have any present plans or proposals that relate to or would result in any change in the business, policies, management, structure or capitalization of the Issuer. Rho Ventures reserves the right to acquire, or dispose of, additional securities of the Issuer in the ordinary course of its business, to the extent deemed advisable in light of its general investment and trading policies, market conditions or other factors. The Reporting Persons may engage in discussions from time to time with other stockholders of the Issuer, including the Existing Stockholders, regarding the acquisition by the Reporting Persons or others of shares of the Issuer’s Common Stock held by such stockholders. Rho Ventures will continue to evaluate the business and prospects of the Issuer, and its present and future interest in, and intentions with respect to, the Issuer, and in connection therewith expects from time to time to consult with management and other stockholders of the Issuer.

Other than as described above and as set forth in the Agreements, the Reporting Persons do not have any plans or proposals which would result in any of the following:

(a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;

(c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

(d) Any change in the present Board or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(e) Any material change in the present capitalization or dividend policy of the Issuer;

(f) Any other material change in the Issuer’s business or corporate structure;

(g) Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

(h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or

(j) Any action similar to any of those enumerated above.

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ITEM 5. Interest in Securities of the Issuer.

(a)-(b) Rho Ventures may be deemed, for purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, to have sole power to direct the voting and disposition of 11,601,306 shares of Common Stock, representing approximately 40.60% of the 28,576,612 shares of Common Stock outstanding, based on information provided by the Issuer.

RMV, as the general partner of Rho Ventures, and Rho Capital, as the managing member of RMV, each may be deemed to have sole power to direct the voting and disposition of the 11,601,306 shares of Common Stock beneficially owned by Rho Ventures, representing approximately 40.60% of the 28,576,612 shares of Common Stock outstanding, based on information provided by the Issuer.

Joshua Ruch, as a managing member of Rho Capital, may be deemed to have sole power to direct the voting and disposition of the 11,601,306 shares of Common Stock beneficially owned by Rho Capital, representing approximately 40.60% of the 28,576,612 shares of Common Stock outstanding, based on information provided by the Issuer.

Habib Kairouz, as a managing member of Rho Capital, may be deemed to have sole power to direct the voting and disposition of the 11,617,887 shares of Common Stock beneficially owned by Rho Capital, representing approximately 40.66% of the 28,576,612 shares of Common Stock outstanding, based on information provided by the Issuer. In addition, Mr. Kairouz beneficially owns 1,875 shares of Common Stock as a result of the vesting in full on February 2, 2011 of restricted stock granted to Mr. Kairouz in connection with his appointment as a member of the Board on December 21, 2009 and 14,706 options to purchase shares of Common Stock under the Issuer’s 2005 Stock Incentive Plan.

Mark Leschly, as a managing member of Rho Capital, may be deemed to have sole power to direct the voting and disposition of the 11,601,306 shares of Common Stock beneficially owned by Rho Capital, representing approximately 40.60% of the 28,576,612 shares of Common Stock outstanding, based on information provided by the Issuer.

Each of Messrs. Ruch, Kairouz and Leschly disclaim beneficial ownership of the shares of Common Stock beneficially owned by Rho Ventures, RMV and Rho Capital.

(c) Except as described in this Amendment No. 3, none of the Reporting Persons has effected any transaction in the securities of the Issuer in the last 60 days.

(d) No persons other than the Reporting Persons and their investment clients have the right to participate in the receipt of dividends from, or the proceeds from the sale of, the shares of Common Stock covered hereby.

(e) Not Applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

The information set forth in Item 4 hereof is hereby incorporated by reference into this Item 6.

Habib Kairouz beneficially owns 1,875 shares of Common Stock as a result of the vesting in full on February 2, 2011 of restricted stock granted to Mr. Kairouz in connection with his appointment as a member of the Board on December 21, 2009. Mr. Kairouz also holds 14,706 options to purchase shares of Common Stock with an exercise price of $2.50 per share, which were granted on August 3, 2011 and vested in full on August 3, 2012 and expire on August 3, 2021. In addition, Mr. Kairouz was granted 22,321 options to purchase shares of Common Stock with an exercise price of $1.12 per share on August 8, 2012, which vests in full on August 8, 2013 and expires on August 8, 2022. These options to purchase Common Stock were granted to Mr. Kairouz in connection with his service as a member of the Board.

13D

CUSIP No. 096227103 Page 14 of 16 pages

ITEM 7. Materials to be Filed as Exhibits.

Exhibit 1:	Joint Filing Agreement as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended*
Exhibit 2:	Securities Purchase Agreement, between the Issuer and the Purchaser identified therein, dated December 21, 2009*
Exhibit 3:	Securities Purchase Agreement, between the Issuer and the Purchaser identified therein, dated September 7, 2011**
Exhibit 4:	Amended and Restated Registration Rights Agreement, between the Issuer and the Investors identified therein, dated September 7, 2011**
Exhibit 5:	Amended and Restated Registration Rights Agreement, between the Issuer and the Investors identified therein, dated September 7, 2011**
Exhibit 6:	Lock-Up and Support Agreement, between the Issuer and each of the Stockholders identified therein, dated September 7, 2011**
Exhibit 7:	Lock-Up Agreement, among Habib Kairouz, the Issuer and each of the Purchasers identified therein, dated September 7, 2011**
Exhibit 8:	Note and Warrant Purchase Agreement, among the Issuer, Rho Ventures and the other investors party thereto, dated August 13, 2012
Exhibit 9:	Secured Subordinated Convertible Promissory Note, between the Issuer and Rho Ventures, dated August 13, 2012
Exhibit 10:	Warrant to Purchase Shares of Common Stock of Bluefly, Inc., between the Issuer and Rho Ventures, dated August 13, 2012
Exhibit 11:	Intercreditor Agreement, among the Issuer, EVT Acquisition Co., LLC, Rho Ventures, Prentice Consumer Partners LP and Wells Fargo Bank, National Association, dated August 13, 2012

* Incorporated by reference to the Schedule 13D filed by the Reporting Persons on December 28, 2009.

** Incorporated by reference to the Schedule 13D filed by the Reporting Persons on September 7, 2011.

13D

CUSIP No. 096227103 Page 15 of 16 pages

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned hereby certifies that the information set forth in this statement is true, complete and correct.

EXECUTED as a sealed instrument this 15th day of August, 2012.

RHO VENTURES VI, L.P.
By:	/s/ Jeffrey I. Martin
	Jeffrey I. Martin
	Authorized Signer
RHO CAPITAL PARTNERS LLC
By:	/s/ Jeffrey I. Martin
	Jeffrey I. Martin
	Authorized Signer
RMV VI, L.L.C.
By:	/s/ Jeffrey I. Martin
	Jeffrey I. Martin
	Authorized Signer
/s/ Joshua Ruch
Joshua Ruch
/s/ Habib Kairouz
Habib Kairouz
/s/ Mark Leschly
Mark Leschly

13D

CUSIP No. 096227103 Page 16 of 16 pages

EXHIBIT INDEX

Exhibit 1:	Joint Filing Agreement as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended*
Exhibit 2:	Securities Purchase Agreement, between the Issuer and the Purchaser identified therein, dated December 21, 2009*
Exhibit 3:	Securities Purchase Agreement, between the Issuer and the Purchaser identified therein, dated September 7, 2011**
Exhibit 4:	Amended and Restated Registration Rights Agreement, between the Issuer and the Investors identified therein, dated September 7, 2011**
Exhibit 5:	Amended and Restated Voting Agreement, between the Issuer and each of the Stockholders identified therein, dated December 21, 2009*
Exhibit 6:	Lock-Up and Support Agreement, between the Issuer and each of the Stockholders identified therein, dated September 7, 2011**
Exhibit 7:	Lock-Up Agreement, among Habib Kairouz, the Issuer and each of the Purchasers identified therein, dated September 7, 2011**
Exhibit 8:	Note and Warrant Purchase Agreement, among the Issuer, Rho Ventures and the other investors party thereto, dated August 13, 2012
Exhibit 9:	Secured Subordinated Convertible Promissory Note, between the Issuer and Rho Ventures, dated August 13, 2012
Exhibit 10:	Warrant to Purchase Shares of Common Stock of Bluefly, Inc., between the Issuer and Rho Ventures, dated August 13, 2012
Exhibit 11:	Intercreditor Agreement, among the Issuer, EVT Acquisition Co., LLC, Rho Ventures, Prentice Consumer Partners LP and Wells Fargo Bank, National Association, dated August 13, 2012

* Incorporated by reference to the Schedule 13D filed by the Reporting Persons on December 28, 2009.

** Incorporated by reference to the Schedule 13D filed by the Reporting Persons on September 7, 2011.

EX-99.8

Exhibit 8

Execution Version

NOTE AND WARRANT PURCHASE AGREEMENT

This NOTE AND WARRANT PURCHASE AGREEMENT, dated as of August 13, 2012 (this “Agreement”), is entered into by and among BLUEFLY, INC., a Delaware corporation (the “Company”), PRENTICE CONSUMER PARTNERS, LP, a Delaware limited partnership (“Prentice”), and RHO VENTURES VI, L.P., a Delaware limited partnership (“Rho”). Each of Prentice and Rho are from time to time referred to herein as an “Investor” and, collectively, the “Investors.”

RECITALS

WHEREAS, Prentice desires to purchase from the Company, and the Company desires to issue and sell to Prentice, (i) secured subordinated promissory notes in an aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), in the form attached hereto as Exhibit A (the “Prentice Notes”), together with (ii) a related warrant to acquire shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), in the form attached hereto as Exhibit C (the “Prentice Warrant”), in each case, on the terms, and subject to the conditions, contained herein.

WHEREAS, Rho desires to purchase from the Company, and the Company desires to issue and sell to Rho, (i) secured convertible subordinated promissory notes in an aggregate principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), in the form attached hereto as Exhibit B (the “Rho Notes,” and, together with the Prentice Notes, the “Notes”), together with (ii) a related warrant to acquire shares of Common Stock, in the form attached hereto as Exhibit C (the “Rho Warrant,” and, together with the Prentice Warrant, the “Warrants”), in each case, on the terms, and subject to the conditions, contained herein.

As used in this Agreement, the following terms shall have the following meanings: (i) the term “Initial Securities” shall mean, collectively, the Notes and the Warrants, (ii) the term “Note Conversion Securities” shall mean the shares of Common Stock or Subsequent Round Securities (as defined in the Rho Notes) issuable upon conversion of the Rho Notes, (iii) the term “Warrant Conversion Securities” shall mean the shares of Common Stock issuable upon exercise of the Warrants, and (iv) the term “Securities” shall mean, collectively, the Initial Securities, the Note Conversion Securities and the Warrant Conversion Securities.

AGREEMENT

NOW, THEREFORE, in consideration for the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

PURCHASE AND SALE OF INITIAL SECURITIES; STOCKHOLDER APPROVAL

SECTION 1.1 Initial Securities. Subject to the terms and conditions hereof, the Company hereby (a) issues and sells to Prentice, and Prentice hereby purchases from the Company, the Prentice Notes and (b) issues and sells to Rho, and Rho hereby purchases from the Company, the Rho Notes. In

consideration for the purchase by the Investors of the Notes, the Company also hereby (x) issues and sells to Prentice, and Prentice hereby purchases from the Company, the Prentice Warrants and (y) issues and sells to Rho, and Rho hereby purchases from the Company, the Rho Warrants. The purchase and sale of the Initial Securities is sometimes referred to herein as the “Closing.”

SECTION 1.2 Purchase Price. The aggregate purchase price for the Initial Securities to be purchased by each Investor is the amount set forth opposite such Investor’s name in Schedule 1 (the “Purchase Price”).

SECTION 1.3 Stockholder Approval.

(a) The Company shall take such actions as are reasonably necessary to obtain the Stockholder Approval (as defined below) with respect to the conversion of the Rho Notes and the exercise of the Rho Warrant and the Prentice Warrant through an action by majority written consent of the stockholders, to be signed and delivered by each of the Investors at or prior to Closing (the “Stockholder Written Consent”). The Company shall prepare and file with the United States Securities and Exchange Commission (the “Commission”) within 45 days after the Closing, an information statement relating to the Stockholder Written Consent (the “Information Statement”). The Company shall use its reasonable best efforts to respond to any comments of the Commission and to obtain effectiveness of the Information Statement as promptly as reasonably practicable. The Company shall mail the Information Statement to each of the Company’s stockholders as promptly as reasonably practicable after responding to all such comments received by the Commission to the satisfaction of the Commission.

(b) The Company will notify the Investors promptly of the receipt of any comments from the Commission for amendments or supplements to the Information Statement, and will supply the Investors with copies of all correspondence between the Company or any of its representatives, on the one hand, and the Commission, on the other hand, with respect to the Information Statement. If there shall occur any event that should be set forth in an amendment or supplement to the Information Statement, the Company will promptly prepare and mail to its stockholders such amendment or supplement. The Company will not mail any Information Statement, or any amendment or supplement thereto, to which any Investor reasonably objects after being afforded the opportunity to review the same. The Investors shall cooperate with the Company in the preparation of the Information Statement or in responding to any comments of the Commission, and the Investors shall promptly notify the Company if any information supplied by it for inclusion in the Information Statement shall have become false or misleading, and shall cooperate with the Company in disseminating the Information Statement, as so amended or supplemented, to correct any such false or misleading information.

(c) Each Investor hereby agrees to vote or cause to be voted all shares of the Company’s voting stock that are beneficially owned by such Investor, or over which such Investor has or shares voting control, and to cause every Affiliate (as such term is defined in Rule 12b-2 of the Exchange Act) of the Investor to vote or cause to be voted, from time to time and at all times, in whatever manner as shall be necessary to ensure that the Stockholder Approval is obtained,

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including without limitation, by delivering to the Company a Stockholder Written Consent that is duly executed by such Investor and each of its Affiliates (as applicable) within 10 days of the Closing. “Stockholder Approval” means such approval of the stockholders of the Company as may be necessary under the rules of the NASDAQ Capital Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time, in order to permit (i) the exercise in full of the conversion rights set forth in Section 5 of the Rho Notes (without giving effect to any limitation in such Section 5 relating to any such rules) and (ii) the exercise in full of the rights set forth in the Warrants.

SECTION 1.4 Use of Proceeds. The Company shall use the proceeds from the issuance of the Initial Securities solely for working capital and general corporate purposes.

SECTION 1.5 Registration Rights. Rho shall be entitled to registration rights in respect of the Note Conversion Securities and the Warrant Conversion Securities issuable upon exercise of the Rho Warrant, and, to the extent Rho exercises its rights under this Section 1.5 by providing a Notice (as defined below), Prentice shall be entitled to simultaneous “piggy-back” shelf registration rights in respect of the Warrant Conversion Securities issuable upon exercise of the Prentice Warrant, in each case, consistent with the registration rights granted pursuant to the Amended and Restated Registration Rights Agreement, dated as of September 7, 2011 (the “2011 Agreement”), by and among the Company and the other parties thereto, applied mutatis mutandis, including, without limitation, the Company’s obligation to use its commercially reasonable efforts to effect the registration contemplated by Section 2.2.1 of the 2011 Agreement; provided, however, that (i) the Filing Deadline (as defined in the 2011 Agreement) with respect to the Company’s obligation to prepare and file a shelf registration statement covering such securities shall be a date 60 days following the date of the Company’s receipt of written notice (the “Notice”) from Rho requesting the registration of such securities (or 90 days following the date of the Company’s receipt of the Notice if the Company determines that such longer period is reasonably necessary to avoid filing a shelf registration statement including or incorporating by reference financial statements that do not comply with the requirements of Rule 3-12 of Regulation S-X, as amended, or any successor rule) and (ii) the 180-day Required Effectiveness Deadline (as defined in the 2011 Agreement) shall also commence on the first day following the Company’s receipt of the Notice; and provided, further, however, that, notwithstanding anything to the contrary contained herein or in the 2011 Agreement, the provisions of Section 2.2.4 and Section 2.2.5 of the 2011 Agreement shall be inapplicable to the registration of the shares of Common Stock or Subsequent Round Securities issuable upon conversion of Notes contemplated by this Section 1.5.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants as of the date hereof (except for the representations and warranties that speak as of a specific date, which shall be made as of such date), to the Investors that the following representations and warranties are true and complete, except as set forth in the Schedules delivered herewith. The Schedules shall be arranged in sections corresponding to the numbered sections contained in this Article II, and the disclosures in any section of the schedules shall qualify other sections in this Article II to the extent it is reasonably apparent from a reading of the

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disclosure that such disclosure is applicable to such other sections. Statements qualified by the “Company’s knowledge” or phrases of similar import means that such statement is based upon the knowledge of the executive officers of the Company having responsibility for the matter or matters that are the subject of the statements.

SECTION 2.1 Subsidiaries. The Company has no direct or indirect subsidiaries, other than (i) Eyefly, LLC, a Delaware limited liability company in which it has a 52% membership interest and (ii) EVT Acquisition Co., LLC, a wholly-owned Delaware limited liability company (collectively, the “Subsidiaries”).

SECTION 2.2 Organization and Qualification. The Company and each of its Subsidiaries is an entity duly incorporated or organized (as applicable), validly existing and in good standing under the laws of the State of Delaware, with the requisite entity power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its certificate of incorporation or certificate of formation or, in any material respects, its by-laws, operating agreement or other organizational or charter documents. Each of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to have (i) a material and adverse effect on the legality, validity or enforceability of this Agreement, the Notes or the Warrants (collectively, the “Transaction Documents”), (ii) a material and adverse effect on the results of operations, assets, business, condition (financial or otherwise) or liabilities (including contingent liabilities) of the Company or the Company and its Subsidiaries, taken as a whole, or (iii) any adverse impairment to the Company’s ability to perform in any material respect on a timely basis its obligations under the Transaction Documents (each of the items listed in clauses (i)-(iii), a “Material Adverse Effect”).

SECTION 2.3 Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The Company’s execution and delivery of each of the Transaction Documents and the consummation by it of the transactions contemplated hereby and thereby (including, but not limited to, (i) the sale and delivery of the Initial Securities, (ii) the issuance of the Note Conversion Securities in accordance with the terms of the Rho Notes and (iii) the issuance of the Warrant Conversion Securities in accordance with the terms of the Warrants) have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with (x) the Stockholder Approval and (y) any amendment to the Company’s certificate of incorporation (as amended or restated from time to time) as may be necessary to increase the number of shares of Common Stock authorized thereunder so as to enable the Company to issue Note Conversion Securities in connection with any Subsequent Round of Financing (as defined in the Rho Notes) and the approval by the Company’s stockholders of any such amendment (a “Charter Amendment”). Each of the Transaction Documents has been (or upon delivery will have been) duly executed by the Company and is, or when delivered in

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accordance with the terms hereof, will constitute the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

SECTION 2.4 No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by the Company of the transactions contemplated hereby or thereby (including, without limitation, (A) the sale and delivery of the Initial Securities, (B) the issuance of the Note Conversion Securities in accordance with the terms of the Rho Notes and (C) the issuance of the Warrant Conversion Securities in accordance with the terms of the Warrants) do not and will not (i) conflict with or violate any provisions of the Company’s certificate of incorporation, by-laws or otherwise result in a violation of the organizational documents of the Company, (ii) conflict with, result in any breach of any provision of, or constitute a default (or an event that with notice or lapse of time or both would result in a default) under, result in the creation of any lien upon any of the properties or assets of the Company or any of its Subsidiaries or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract, or (iii) subject to the Stockholder Approval and any Charter Amendment, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any of its Subsidiaries is subject (including federal and state securities laws and regulations and the rules and regulations, assuming the correctness of the representations and warranties made by the Investors herein, of any self-regulatory organization to which the Company or its securities are subject including all applicable trading markets), or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii) such as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. “Material Contract” means any contract of the Company that was filed or required to be filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K, other than any contract which has expired by its terms and does not provide for the continuation of any material obligation on the part of the Company following the date hereof.

SECTION 2.5 Filings, Consents and Approvals. The execution and delivery by the Company of the Transaction Documents, and the performance by the Company of the transactions contemplated hereby and thereby, do not and will not require the Company to effectuate or obtain any registration with, consent or approval of, or notice to any federal, state or other governmental authority or regulatory body, other than periodic and other filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), all required filings with the NASDAQ Capital Market and, with respect to the transactions contemplated by Section 1.5, filings required under the Securities Act of 1933, as amended (the “Securities Act”). The parties hereto agree and acknowledge that, in making the representations and warranties in the foregoing sentence of this Section 2.5, the Company is relying on the representations and warranties made by the Investors in Article III.

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SECTION 2.6 Issuance of Initial Securities. The Initial Securities have been validly issued, and, upon payment therefor, will be fully paid and non-assessable. The Note Conversion Securities, when issued in accordance with the terms of the Rho Notes, will be validly issued, fully paid and non-assessable. The Warrant Conversion Securities, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and non-assessable. The offering, issuance, sale and delivery of (i) the Initial Securities as contemplated by this Agreement, (ii) the Note Conversion Securities as contemplated by the Rho Note and (iii) the Warrant Conversion Securities as contemplated by the Warrants, is (or will be), as applicable, exempt from the registration and prospectus delivery requirements of the Securities Act, are being (or will be) , as applicable, made in compliance in all material respects with all applicable federal and state laws and regulations concerning the offer, issuance and sale of securities, and are not being (or will not be), as applicable, issued in violation of any preemptive or other rights of any stockholder of the Company. The parties hereto agree and acknowledge that, in making the representations and warranties in the foregoing sentence of this Section 2.6, the Company is relying on the representations and warranties made by the Investors in Article III.

SECTION 2.7 Capitalization. The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, options, warrants and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) as of the Closing Date, is as set forth in the Capitalization Table delivered to the Investors concurrently herewith (the “Capitalization Table”). All issued and outstanding shares of capital stock are duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance in all material respects with all applicable federal and state securities laws and none of such outstanding securities were issued in violation of any preemptive rights or similar rights to subscribe for or purchase any capital stock of the Company. The Capitalization Table is true and accurate as of the Closing. Except as disclosed in the Capitalization Table, as of the Closing, the Company did not have outstanding any other options, warrants, securities convertible into Common Stock, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any Person any right to subscribe for or acquire, any shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth in the Capitalization Table, and except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no preemptive rights, anti-dilution or price adjustment provisions contained in any security issued and outstanding by the Company (or in any agreement providing rights to security holders) and the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities. Except as set forth in the Capitalization Table, and except for the 2011 Agreement and the Company’s amended and restated Voting Agreement, dated as of December 21, 2009, (A) there are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act, (B) there are no agreements or arrangements pursuant to which any person has any co-sale rights, subscription rights, rights of first refusal, rights of first offer, tag along rights, or drag along rights, and (C) there are no agreements or arrangements relating to the voting of securities of the

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Company, nor are there any other similar rights relating to the, registration, transfer, sale or voting of the securities of the Company. To the Company’s knowledge, except as disclosed in the SEC Reports and any Schedules 13D or 13G filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in Schedule 2.7, as of the date hereof no person or group of related persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock.

SECTION 2.8 SEC Reports; Disclosure Materials. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension and has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof. Such reports required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, together with any materials filed or furnished by the Company under the Exchange Act, whether or not any such reports were required being collectively referred to herein as the “SEC Reports” and, together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”. As of their respective dates (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing), the SEC Reports filed by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act (as applicable) and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing) by the Company, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. All material agreements to which the Company is a party or to which the property or assets of the Company are subject are included as part of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the Commission.

SECTION 2.9 Financial Statements. The financial statements of the Company included in the SEC Reports comply (or, to the extent corrected by a subsequent restatement that is filed with the Commission prior to the date hereof, as corrected do comply) in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with U.S. generally accepted accounting principles, as applied by the Company (“GAAP”), applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments.

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SECTION 2.10 Tax Matters. The Company and each of its Subsidiaries has (i) prepared and filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith, with respect to which adequate reserves have been set aside on the books of the Company or its Subsidiaries (as applicable) and (iii) set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply, except, in the case of clauses (i) and (ii) above, where the failure to so pay or file any such tax, assessment, charge or return would not reasonably be expected to have a Material Adverse Effect. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction and the officers of the Company know of no basis for any such claim.

SECTION 2.11 Material Changes; Undisclosed Events, Liabilities or Developments; Solvency. Since the date of the latest financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there have been no events, occurrences or developments that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (ii) there has not been any material change or amendment to, or any waiver of any material right by the Company under, any Material Contract, (iii) all Material Contracts are in full force and effect except those that have expired by their terms or as otherwise set forth in the SEC Reports and, to the Company’s knowledge, no party to any Material Contract is in breach thereof in any material respect, (iv) the Company’s business has been operated in the ordinary course, (v) the Company has not incurred any material liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (vi) the Company has not altered its method of accounting or changed its auditors, except as disclosed in its SEC Reports, (vii) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (viii) the Company has not issued any equity securities to any officer, director or affiliate, except pursuant to existing Company stock-based plans. The Company has not taken any steps to seek protection pursuant to any bankruptcy law and, to the Company’s Knowledge, none of its creditors intends to initiate involuntary bankruptcy proceedings and there does not exist any fact which would reasonably lead a creditor to do so. Based on the financial condition of the Company as of the Closing, after giving effect to transactions contemplated hereby to occur at the Closing, the Company reasonably expects to have sufficient cash on hand to pay all of its currently foreseeable expenses for the next twelve months.

SECTION 2.12 Environmental Matters. To the Company’s knowledge, neither the Company nor any of its Subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any real property contaminated with any substance that is in violation of any Environmental

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Laws, (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (iv) is subject to any claim relating to any Environmental Laws; which, in the case of any of the matters described in clauses (i) — (iv), has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and, to the Company’s knowledge, there is no pending or threatened investigation that might lead to such a claim.

SECTION 2.13 Litigation. Except as set forth in Schedule 2.13, there is no action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against the Company or any of its properties or any officer, director or employee of the Company acting in his or her capacity as an officer, director or employee before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility (“Action”) (and in the case of any inquiry or investigation, to the Company’s knowledge) before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company or any of its Subsidiaries, and no such Action is currently threatened that could reasonably be expected to lead to the commencement of an Action. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

SECTION 2.14 Contracts. Schedule 2.14 lists the following contracts, agreements, commitments or binding understanding, whether oral or written (collectively, the “Contracts”), to which the Company or any of its Subsidiaries is a party or subject or by which either the Company or any of its Subsidiaries is bound: (x) each employment related Contract, (y) each Contract (A) with any Insider or (B) between or among any insiders relating in any way to the Company; and (iii) each Material Contract. “Insider” means (i) each of Quantum Industrial Partners LDC, a Cayman Islands limited duration company, SFM Domestic Investments LLC, a Delaware limited liability company, Maverick Fund USA, Ltd., a Texas limited partnership, Maverick Fund, L.D.C., a Cayman Islands exempted limited duration company, Maverick Fund II, Ltd., a Cayman Islands exempted company, Prentice Consumer Partners, LP, a Delaware limited partnership and Rho Ventures VI, L.P., (ii) any existing officer or director of the Company, (iii) any member of the immediate family of the persons described in clause (i) or (iv) any entity in which any of the persons described in clause (i), (ii) or (iii) owns any beneficial interest (other than less than one percent of the outstanding shares of capital stock of any corporation whose stock is listed on a national securities trading market). The term “person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

SECTION 2.15 Employment Matters. No material labor dispute exists or, to the Company’s knowledge, is imminent with respect to any of the employees of the Company or any of its Subsidiaries which would reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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SECTION 2.16 Employee Relations. Neither the Company, nor any of its Subsidiaries, is a party to any collective bargaining agreement. To the Company’s knowledge, the Company’s and its Subsidiaries’ relations with their respective employees are as disclosed in the SEC Reports. Except as disclosed in the SEC Reports or as the Investors have otherwise been made aware, no current executive officer of the Company has notified the Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. To the Company’s knowledge, no executive officer of the Company is in violation of any material term of any employment Contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters.

SECTION 2.17 Labor Matters. The Company and each of its Subsidiaries is in compliance in all material respects with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

SECTION 2.18 Minute Books. The minute books of the Company for the period from 2001 to present, all of which have been made available to the Investors, are complete and correct. The minute books of the Company contain, in all material respects, accurate records of all meetings held and actions taken by the board of directors and committees of the board of directors of the Company during such period, and no meeting of the board of directors or committees has been held for which minutes are not contained in such minute books, other than meetings held within the last sixty (60) days for which minutes have not yet been prepared and/or approved by the board of directors or applicable committee.

SECTION 2.19 Affiliate Transactions. Except as disclosed in the SEC Reports, no Insider has any agreement, contract, commitment or binding understanding, whether oral or written, with the Company or any of its Subsidiaries (other than the employment agreements filed with the Commission), any loan to or from the Company or any of its Subsidiaries or any interest in any assets (whether real, personal or mixed, tangible or intangible) used in or pertaining to the business of the Company or any of its Subsidiaries (other than ownership of capital stock of the Company). To the Company’s knowledge, except as set forth in the SEC Reports, no director or officer has any direct or indirect interest in any supplier of the Company or any of its Subsidiaries or in any Person from whom or to whom the Company or any of its Subsidiaries leases any property, or in any other Person with whom the Company or any of its Subsidiaries otherwise transacts business of any nature, other than transactions entered into in the ordinary course of business on the Company’s web site.

SECTION 2.20 Compliance. Neither the Company nor any of its Subsidiaries (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or its Subsidiaries under), nor has the Company or any of its Subsidiaries received written notice of a claim that it is in default under or that it is in violation of, any Material Contract (whether or not such default or violation has been waived), (ii)

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is not in violation of any order of which the Company or its Subsidiaries has been made aware in writing of any court, arbitrator or governmental body having jurisdiction over the Company, its Subsidiaries or their respective properties or assets, or (iii) is in violation of, or in receipt of written notice that it is in violation of, any statute, rule or regulation of any governmental authority applicable to the Company or its Subsidiaries, except in each case as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

SECTION 2.21 Regulatory Permits. The Company and each of its Subsidiaries possesses or has applied for all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as currently conducted and as described in the SEC Reports, except where the failure to possess such permits, individually or in the aggregate, has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (“Material Permits”), and (i) neither the Company nor any of its Subsidiaries has received any notice in writing of proceedings relating to the revocation or material adverse modification of any such Material Permits and (ii) to the Company’s knowledge, there do not exist any facts or circumstances that would give rise to the revocation or material adverse modification of any Material Permits.

SECTION 2.22 Title to Assets. Neither the Company nor any of its Subsidiaries owns any real property. Each of the Company and its Subsidiaries has good and marketable title to all tangible personal property owned by it which is material to the business of the Company, taken as a whole, free and clear of all liens (other than liens under the Company’s senior credit facility) except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries. Any real property and facilities held under lease by the Company or its Subsidiaries are held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or its Subsidiaries (as applicable).

SECTION 2.23 Insurance. The Company and each of its Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses and locations in which the Company or its Subsidiaries is engaged.

SECTION 2.24 Patents and Trademarks. The Company and each of its Subsidiaries owns, possesses, licenses or has other rights to use all foreign and domestic patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, inventions, trade secrets, technology, Internet domain names, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of its business as now conducted, as described in the SEC Reports (the “Company Intellectual Property”). Except as set forth in the SEC Reports, (a) to the Company’s knowledge, there are no rights of third parties to any such Company Intellectual Property that is owned by the Company or its Subsidiaries; (b) to the Company’s knowledge, there is no pending or threatened Action by others challenging the Company’s or its Subsidiaries’ rights in or to any such Company Intellectual Property that could reasonably be expected to have a Material Adverse Effect; and (c) to the Company’s knowledge, there is no pending or threatened Action by others that the Company or its Subsidiaries infringes or otherwise violates any Intellectual Property of others that could reasonably be expected to have a Material Adverse Effect.

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SECTION 2.25 Internal Accounting Controls; Disclosure Controls. Except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company (i) has established and maintained disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act, and (ii) has disclosed, based on its most recent evaluations, to its outside auditors and the audit committee of the board of directors of the Company (A) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data, and (B) any fraud known to the Company, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

SECTION 2.26 Sarbanes-Oxley. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it, except where such noncompliance would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 2.27 Foreign Corrupt Practices. Neither the Company, nor its Subsidiaries, nor, to the Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company or its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political parties or campaigns from corporate funds; (iii) violated or is in violation in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

SECTION 2.28 Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its SEC Filings and is not so disclosed or that otherwise would reasonably be expected to have a Material Adverse Effect.

SECTION 2.29 Indebtedness. Except as disclosed in the SEC Reports or as incurred pursuant to transactions entered into in the ordinary course of business including draws under the senior credit facility, since June 30, 2012, neither the Company nor any of its Subsidiaries (i) has any outstanding indebtedness, and (ii) is in violation of any term of or is in default under any contract, agreement or instrument relating to any indebtedness, except where such violations and defaults would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.

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SECTION 2.30 Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Article III of this Agreement, no registration under the Securities Act is required for the offer and sale of the Initial Securities by the Company to the Purchasers under the Transaction Documents.

SECTION 2.31 Registration Rights. Other than as set forth in the SEC Reports and the Transaction Documents, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company other than those securities which are currently registered on an effective registration statement on file with the Commission.

SECTION 2.32 Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the twelve months preceding the date hereof, received written notice from any trading market on which the Common Stock is listed or quoted to the effect that the Company is not in compliance in all material respects with the listing and maintenance requirements for continued trading of the Common Stock on the NASDAQ Capital Market.

SECTION 2.33 Disclosure. The Company acknowledges and agrees that the Investors have not made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents.

SECTION 2.34 Brokers. Except for the payment of the Origination Fee, neither the Company, nor any of its officers, directors or employees, has employed any broker or finder, or incurred any liability for any brokerage fees, commissions, finder’s or other similar fees or expenses in connection with the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

Each Investor hereby represents and warrants, severally as to itself and not jointly, to the Company as follows:

SECTION 3.1 Organization; Authority. Such Investor is a an entity duly formed, validly existing and in good standing under the laws of the jurisdiction set forth next to its name on Schedule 1, with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance by such Investor of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party have been duly authorized by all necessary action on the part of such Investor, and no further action is required by such Investor (or its respective managing member or general partner, if applicable) in connection therewith. This Agreement and the other Transaction Documents to which such Investor is a party have been duly executed by such Investor, and when delivered by such Investor in accordance with the terms hereof and thereof, each will constitute the valid and legally binding

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obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

SECTION 3.2 No Conflicts. The execution, delivery and performance by such Investor of this Agreement and the other Transaction Documents to which it is a party and the consummation by such Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the formation documents of such Investor, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Investor to perform its obligations hereunder.

SECTION 3.3 Filings, Consents and Approvals. Such Investor is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by such Investor of the Transaction Documents.

SECTION 3.4 Investment Representations. Such Investor acknowledges that the offer and sale of the Securities to such Investor have not been registered under the Securities Act, or the securities laws of any state or regulatory body, are being offered and sold in reliance upon exemptions from the registration requirements of the Securities Act and such laws and may not be transferred or resold without registration under such laws unless an exemption is available.

(a) Such Investor is acquiring the Securities for investment, and not with a view to the resale or distribution thereof, and is acquiring the Securities for its own account.

(b) Such Investor is an “accredited investor” (as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act). Such Investor acknowledges that it has had the opportunity to review the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents. Such

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Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Securities. Such Investor acknowledges and agrees that the Company has not made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents.

(c) Such Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Investor is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(d) Neither such Investor, nor any of its principal owners, partners, members, directors or officers is included on the Office of Foreign Assets Control list of foreign nations, organizations and individuals subject to economic and trade sanctions, based on U.S. foreign policy and national security goals, or a person named on the list of known or suspected terrorists, terrorist organizations or other sanctioned persons issued by the U.S. Treasury Department’s Office of Foreign Assets and Control.

SECTION 3.5 Reliance on Exemptions. Such Investor understands that the Securities being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

SECTION 3.6 No Governmental Review. Such Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

SECTION 3.7 Office. Such Investor’s office in which its investment decision with respect to the Securities was made is located at the address set forth opposite its name on Schedule 1.

SECTION 3.8 Brokers. Neither the Investors, nor any of their officers, directors or employees, has employed any broker or finder, or incurred any liability for any brokerage fees, commissions, finder’s or other similar fees or expenses in connection with the transactions contemplated hereby.

SECTION 3.9 Disclosure. The Investors acknowledge and agree that the Company has not made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents.

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ARTICLE IV

SURVIVAL; INDEMNIFICATION

SECTION 4.1 Survival. The representations and warranties contained in Articles II and III hereof shall survive the Closing and the delivery of the Notes.

SECTION 4.2 Indemnification.

(a) Indemnification of the Investors. The Company will indemnify and hold each Investor and its respective directors, officers, stockholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls such Investor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that such Investor Party may suffer or incur arising from or relating to any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents. The Company will not be liable to any Investor Party under this Agreement to the extent, but only to the extent that a loss, claim, damage or liability is attributable to such Investor Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

(b) Indemnification of the Company. Each Investor will severally and not jointly indemnify and hold the Company and its directors, officers, stockholders, members, partners, employees and agents (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title), each person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, stockholders, agents, members, partners or employees (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding a lack of such title or any other title) of such controlling person (each, a “Company Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that the Company Party may suffer or incur arising from or relating to any of the representations, warranties, covenants or agreements made by such Investor in this Agreement or in the other Transaction Documents.

SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any party (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 4.2(a) or (b), such Indemnified Person shall promptly notify the Company and the other Investor or if the Indemnified Person is the Company, shall notify the

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Investors, as applicable (the party against whom indemnity may be sought hereinafter referred to as the “Indemnifying Person”), in writing and the Indemnifying Person shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person to so notify the Indemnifying Person shall not relieve the Indemnifying Person of its obligations hereunder except to the extent that the Indemnifying Person is actually and materially and adversely prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Indemnifying Person shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to the Indemnified Person in such proceeding; or (iii) in the reasonable judgment of counsel to the Indemnified Person, there exists or shall exist a conflict of interest that would make it inappropriate for the same counsel to represent both the Indemnified Person and the Indemnifying Person. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned unless the Indemnifying Person fails to defend any proceeding or fails to promptly respond to a settlement offer. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Indemnifying Person shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

SECTION 5.1 Conditions Precedent to the Obligations of the Investors at Closing. The obligation of each Investor to purchase the Initial Securities opposite its respective name on Schedule 1 at the Closing is subject to the fulfillment, on or prior to the date hereof (the “Closing Date”), of each of the following conditions, any of which may be waived by an Investor as with respect to its obligations:

(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the Closing Date, except for such representations and warranties that speak as of a specific date, in which case such representations and warranties shall have been true and correct in all material respects as of such date.

(b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to Closing.

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated in the Transaction Documents.

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(d) Consents. The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Initial Securities at the Closing, all of which shall be and remain so long as necessary in full force and effect.

(e) No Suspensions of Trading in Common Stock; Listing. The Common Stock (i) shall be designated for quotation or listed on the NASDAQ Capital Market and (ii) shall not have been suspended, as of the Closing Date, by the Commission or the NASDAQ Capital Market from trading on the NASDAQ Capital Market nor shall suspension by the Commission or the NASDAQ Capital Market have been threatened, as of the Closing Date, either (A) in writing by the Commission or the NASDAQ Capital Market or (B) by falling below the minimum listing maintenance requirements of the NASDAQ Capital Market.

(f) Company Deliverables. The Company shall have issued, delivered or caused to have been delivered to the Investors each of the following:

(i) each of the Transaction Documents, duly executed by the Company;

(ii) a legal opinion of counsel to the Company, dated as of the Closing Date, executed by such counsel and addressed to the Investors;

(iii) a certificate of the Secretary of the Company (the “Secretary’s Certificate”), dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the certificate of incorporation, as amended, and by-laws, as amended of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company;

(iv) a certificate evidencing the formation and good standing of the Company in the State of Delaware issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within five (5) business days of the Closing Date;

(v) a certificate evidencing the Company’s qualification as a foreign corporation in good standing issued by the States of New York and Ohio, as of a date within five (5) business days of the Closing Date; and

(g) Compliance Certificate. The Company shall have delivered to the Investors a certificate, dated as of the Closing Date and signed by its Chief Executive Officer or its Chief Financial Officer, certifying to the fulfillment of the conditions specified in Sections 5.1(a) and 5.1(b).

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SECTION 5.2 Conditions Precedent to the Obligations of the Company at Closing. The Company’s obligation to sell and issue the Initial Securities at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

(a) Representations and Warranties. The representations and warranties of the Investors contained herein shall be true and correct in all material respects as of the Closing Date, except for such representations and warranties that speak as of a specific date, in which case such representations and warranties shall have been true and correct in all material respects as of such date.

(b) Performance. The Investors shall have performed, satisfied or complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investors at or prior to Closing.

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated in the Transaction Documents.

(d) Consents. The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Initial Securities at the Closing, all of which shall be and remain so long as necessary in full force and effect.

(e) Investor Deliverables. Each Investor shall have delivered or caused to have been delivered to the Company the following:

(i) each of the Transaction Documents to which such Investor is a party, duly executed by such Investor; and

(ii) the Purchase Price in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to the Investors by the Company for such purpose.

ARTICLE VI

MISCELLANEOUS

SECTION 6.1 Fees and Expenses.

(a) At the Closing, the Company shall reimburse the Investors for their reasonable legal fees and expenses incurred in connection with the transactions contemplated by this Agreement; provided, however, that (i) in no event shall the Investors be entitled to receive in the aggregate an amount from the Company pursuant to this Section 5.1(a) in excess of $40,000 and (ii) each Investor shall provide the Company with reasonably detailed invoices for such fees and expenses. Other than as provided with respect to legal fees and expenses described in the immediately preceding sentence, each

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Investor shall pay the fees and expenses of their respective advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other Transaction Documents.

(b) At the Closing, the Company shall pay to Prentice by wire transfer of immediately available funds an origination fee of Thirty Thousand Dollars ($30,000) (the “Origination Fee”).

SECTION 6.2 Publicity. Except as may be required by applicable law or the rules of any securities exchange or market on which securities of the Company are traded, no party hereto shall issue a press release or public announcement or otherwise make any disclosure concerning this Agreement and the transactions contemplated hereby, without prior approval of the others; provided, however, that nothing in this Agreement shall restrict the Company or any Investor from disclosing such information (a) that is already publicly available, (b) to the extent required or appropriate in response to any summons or subpoena or to comply with applicable law, regulations or the rules of any national securities exchange or quotation system (provided that the disclosing party will use commercially reasonable efforts to notify the other parties in advance of such disclosure under this clause (b) so as to permit the non-disclosing parties, in the case of a summons or subpoena, seek a protective order or otherwise contest such disclosure, and the disclosing party will use commercially reasonable efforts to cooperate, at the expense of the non-disclosing parties, in pursuing any such protective order) or (c) in connection with any litigation involving disputes as to the parties’ respective rights and obligations hereunder.

SECTION 6.3 Entire Agreement. This Agreement and the other Transaction Documents constitute the entire Agreement between the parties hereto with respect to the subject matter hereof and supersede all previous negotiations, commitments and writings with respect to such subject matter.

SECTION 6.4 Assignments; Parties in Interest. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing herein, express or implied, is intended to or shall confer upon any person not a party hereto any right, benefit or remedy of any nature whatsoever under or by reason hereof, except as otherwise provided herein.

SECTION 6.5 Amendments. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, the parties against whom such amendment or modification is sought to be enforced.

SECTION 6.6 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement.

SECTION 6.7 Notices and Addresses. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given

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and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section 6.7 prior to 5:00 p.m., Eastern Standard Time, on a business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 6.7 on a day that is not a Trading Day or later than 5:00 p.m., Eastern Standard Time, on any business day, (c) the business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

To Company:	Bluefly, Inc.
	42 West 39th Street, 9th Floor
	New York, New York 10018
	Fax:    (212) 840-1903
	Attn:   General Counsel
	With a copy to:
	Dechert LLP
	30 Rockefeller Plaza
	New York, NY 10112-2200
	Fax:    (212) 698-3599
	Attn:   Richard A. Goldberg, Esq.
To the Investors:	To the address set forth on Schedule 1;
	With a copy to:
	Goodwin Procter LLP
	The New York Times Building
	620 Eighth Avenue
	New York, NY 10112-2200
	Fax:    (212) 355-3333
	Attn:   Stephen M. Davis, Esq.

SECTION 6.8 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

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SECTION 6.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, employees or agents) shall be commenced exclusively in the applicable courts located in the State of New York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the applicable courts located in the County of New York, State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any such courts located in the County of New York, State of New York, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for 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 HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 6.10 Execution; Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf’ format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been duly executed on the date first set forth above.

BLUEFLY, INC.
By:	/s/ Joseph Park
	Name: Joseph Park
	Title: CEO
RHO VENTURES VI, L.P.
By: RMV VI, L.L.C., its General Partner
By: Rho Capital Partners LLC, its Managing Member
By:	/s/ Jeffrey Martin
	Name: Jeffrey Martin
	Title: Attorney-in-Fact
PRENTICE CONSUMER PARTNERS, LP
By: Prentice Consumer Partners GP, LLC, its General Partner
By:	/s/ Mario Ciampi
	Name: Mario Ciampi
	Title: Managing Partner

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SCHEDULE 1

INVESTORS

Name and Address of Investor	Aggregate Principal Amount of Note		Shares of Common Stock  Issuable upon Exercise of Warrants		Aggregate  Purchase Price
Prentice Consumer Partners, LP 623 Fifth Avenue, 32nd Floor New York, NY 10022	$	1,500,000		476,190	$	1,500,000
Rho Ventures VI, L.P. 152 West 57th Street, 23rd Floor New York, NY 10022	$	1,500,000		476,190	$	1,500,000
TOTAL	$	3,000,000		952,380	$	3,000,000

EXHIBIT A

FORM OF PRENTICE NOTES

[attached]

EXHIBIT B

FORM OF RHO NOTES

[attached]

EXHIBIT C

FORM OF PRENTICE & RHO WARRANT

[attached]

EX-99.9

Exhibit 9

Execution Version

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT, DATED AUGUST 13, 2012, BETWEEN WELLS FARGO BANK, NATIONAL ASSOCIATION, PRENTICE CONSUMER PARTNERS, LP, A DELAWARE LIMITED PARTNERSHIP AND RHO VENTURES VI, L.P., A DELAWARE LIMITED PARTNERSHIP (THE “INTERCREDITOR AGREEMENT”). PAYOR SHALL FURNISH A COPY OF THE INTERCREDITOR AGREEMENT UPON WRITTEN REQUEST AND WITHOUT CHARGE.

THE OFFER AND SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE AND ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. CERTIFICATES REPRESENTING ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE SHALL INCLUDE A LEGEND TO SIMILAR EFFECT AS THE FOREGOING.

BLUEFLY, INC.

SECURED SUBORDINATED CONVERTIBLE PROMISSORY NOTE

$1,500,000
New York, New York	August 13, 2012

FOR VALUE RECEIVED, the undersigned, BLUEFLY, INC., a Delaware corporation (the “Payor” or the “Company”), promises to pay to the order of Rho Ventures VI L.P., a Delaware limited partnership, or its registered assign (the “Payee”), the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) and interest on the outstanding principal balance as set forth herein.

1. Interest Rate; Payment.

(a) The outstanding principal balance of this Secured Subordinated Convertible Promissory Note (this “Note”) shall bear interest at an annual rate equal to 12% per annum, with interest accruing, from and including the date hereof, on a cumulative, compounding basis. Interest shall be computed on the basis of a 365- or 366-day year, as the case may be, and the actual number of days elapsed, and, subject to Section 5, shall be payable only upon repayment of the principal on any Repayment Date (as defined below) in cash.

(b) The outstanding principal and all accrued and unpaid interest shall be paid in full upon the earliest to occur of (i) August 13, 2013, (ii) a Change of Control (as

defined below) and (iii) the date on which the Company consummates a debt or equity financing (other than a Permitted Refinancing) resulting in proceeds to the Company of at least $7,500,000 (excluding for this purpose any proceeds received by the Company on account of the conversion of any notes, including this Note, or the exercise of any warrants, in each case, whether currently outstanding or hereafter issued) (the “Maturity Date”), unless repaid earlier pursuant to the provisions of Section 2 (the date of any payment pursuant to Section 2 and the Maturity Date, collectively referred to as a “Repayment Date”) or unless converted into Conversion Securities (as defined below) pursuant to Section 5 on or prior to the Maturity Date. On a Repayment Date, the Payor shall pay the applicable amount of principal and interest in lawful money of the United States of America by wire or bank transfer of immediately available funds to an account designated by the Payee in writing from time to time. “Change of Control” means (1) the Company consummating a transaction or series of related transactions to effectuate any sale or other disposition of all or substantially all of its assets, (2) the Company consummating a consolidation or merger with or into another entity (other than a merger of the Company with and into one of its wholly-owned subsidiaries), (3) any “Person” (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (as defined in Rule 13d-5, promulgated under the Exchange Act) other than Payee and/or its affiliates and one or more of Quantum Industrial Partners, LDC, SFM Domestic Investments, LLC, Maverick Capital, Ltd., Rho Ventures, L.P., Prentice Capital Management, LP and/or their affiliates or any group that includes any such Person, becoming the beneficial owner (as determined by Rule 13d-3, promulgated under the Exchange Act), directly or indirectly, of outstanding shares of stock of the Company entitling such Person or Persons to exercise 50% or more of the total votes entitled to be cast at a regular or special meeting, or by action by written consent, of the stockholders of the Company in the election of directors, or (4) any other sale of a majority of the outstanding equity of the Company, in one transaction or in a series of transactions.

2. Prepayment Upon Event of Default.

(a) Upon the occurrence of an Event of Default (under Section 3(d) or (e)), the outstanding principal of and all accrued interest on this Note shall be accelerated and shall automatically become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived by the Payor, notwithstanding anything contained herein to the contrary.

(b) Subject to the terms of the Intercreditor Agreement, the Payee shall, at their sole option, have the right to require Payor to pay the outstanding principal of and all accrued interest on this Note upon the occurrence of any Event of Default under Section 3(a), (b), (c), (f), (g) or (h).

(c) Any prepayment under this Section 2 shall include payment of reasonable costs and expenses, if any, of the Payee associated with such prepayment.

3. Events of Default. An “Event of Default” shall occur if:

(a) the Payor shall default in the payment of the principal of or interest payable on this Note, when and as the same shall become due and payable, whether at maturity or at a date fixed for prepayment or by acceleration or otherwise and such default with respect to the payment of interest shall continue unremedied for two days;

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(b) the Payor shall fail to observe or perform any covenant or agreement contained in this Note, and such failure shall continue for ten business days after Payor receives notice of such failure;

(c) any representation, warranty, certification or statement made by or on behalf of the Payor in this Note or in any certificate, writing or other document delivered pursuant hereto shall prove to have been incorrect in any material respect when made;

(d) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (A) relief in respect of Payor or of a substantial part of Payor’s respective property or assets, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law (any such law, a “Bankruptcy Law”), (B) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a substantial part of the property or assets of any Payor, (C) the winding up or liquidation of any Payor; and such proceeding or petition shall continue undismissed for 60 days, or an order or decree approving or ordering any of the foregoing shall be entered;

(e) the Payor shall (A) voluntarily commence any proceeding or file any petition seeking relief under a Bankruptcy Law, (B) consent to the institution of or the entry of an order for relief against it, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (d), above, (C) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a substantial part of the property or assets of the Payor, (D) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (E) make a general assignment for the benefit of creditors, (F) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (G) take any action for the purpose of effecting any of the foregoing;

(f) one or more judgments or orders for the payment of money in excess of $250,000 in the aggregate shall be rendered against the Payor and such judgment(s) or order(s) shall continue unsatisfied and unstayed for a period of 30 days;

(g) the Payor shall default in the payment of any principal, interest or premium, or any observance or performance of any covenants or agreements, with respect to indebtedness (excluding trade payables and other indebtedness entered into in the ordinary course of business) in excess of $125,000 in the aggregate for borrowed money or any obligation which is the substantive equivalent thereof and such default shall continue for more than the period of grace, if any, or of any such indebtedness or obligation shall be declared due and payable prior to the stated maturity thereof;

(h) any material provisions of this Note shall terminate or become void or unenforceable or the Payor shall so assert in writing.

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4. Security.

(a) Grant of Security. Subject to the terms of the Intercreditor Agreement, the Company hereby grants to and creates in favor of Payee a continuing security interest and lien under the UCC (as defined below) and all other applicable laws in and to all Collateral (as defined below), as security for the full and timely payment, observance and performance of this Note. “Collateral” means any and all of the now existing and hereafter acquired personal property assets of the Company and its subsidiaries.

(b) Rights in Collateral. Company represents, warrants and covenants that it has and shall have at all times good and valid title to all of the Collateral, free and clear of all Liens (as such term is defined in that certain Amended and Restated Credit Agreement, dated as of June 17, 2011, by and between Bluefly, Inc. and Wells Fargo Bank, National Association, as amended, restated or refinanced from time to time (the “Credit Agreement”)), other than (i) Liens in favor of Wells Fargo Bank, National Association under the Credit Agreement and (ii) Permitted Encumbrances (as such term is defined in the Credit Agreement). Company represents and warrants that this Note creates a valid security interest in the Collateral and, upon the filing of financing statements in the State of Delaware, such security interest shall constitute a perfected lien on and security interest in all Collateral in which a security interest may be perfected by filing a financing statement pursuant to the Uniform Commercial Code (the “UCC”).

(c) Preservation of Security Interest. Company shall diligently preserve and protect Payee’s security interest in the Collateral and shall, at its expense, cause such security interest to be and remain perfected so long as this Note or any portion thereof or obligation hereunder remains outstanding and unpaid and, for such purposes, Company shall, from time to time at Payee’s reasonable request and at Company’s expense, file or record, or cause to be filed or recorded, such instruments, documents and notices (including, without limitation, financing statements and continuation statements) as may be necessary to perfect and continue such security interests. Company shall do all such other acts and things and shall execute and deliver all such other instruments and documents as Payee may reasonably request from time to time to protect and preserve the priority of Payee’s security interest in the Collateral, as a perfected security interest in the Collateral.

5. Conversion.

(a) Right to Convert.

(i) Subject to the terms and conditions of this Section 5 and to stockholder approval (and so subject only to the extent required by the rules of the Nasdaq Capital Market or any other national securities exchange or quotation system upon which the Payor’s common stock, par value $0.01 per share (“Common Stock”), may be listed from time to time), the Payee shall have the right, at its option, , upon or immediately following the consummation of any Subsequent Round of Financing (as defined below), to convert all of the outstanding principal and interest of this Note (the “Principal Obligations”) into a number of fully paid and nonassessable Subsequent Round Securities (with the most favorable terms

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received by any investor in such Subsequent Round of Financing) equal to the quotient obtained by dividing the aggregate amount of Principal Obligations to be converted by the lowest price per Subsequent Round Security paid by any investor in such Subsequent Round of Financing. Written notice of a Subsequent Round of Financing stating the date on which such Subsequent Round of Financing is expected to become effective and describing the terms and conditions of such Subsequent Round of Financing shall be delivered by the Company to, and received by, the Payee not less than 10 days prior to the consummation of such Subsequent Round of Financing.

(ii) Subject to the terms and conditions of this Section 5 and to stockholder approval (and so subject only to the extent required by the rules of the Nasdaq Capital Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time), the Payee shall also have the right, at its option, at any time and from time to time, to convert all or any portion of the Principal Obligations into a number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing the aggregate amount of Principal Obligations to be converted by $1.05 (such quotient, the “Conversion Price”).

(b) Procedure for Conversion. In order to convert all or any portion of the Principal Obligations, the Payee shall (i) surrender this Note, duly endorsed, at the office of the Payor and (ii) simultaneously with such surrender, notify the Payor in writing of its election to convert all or a portion of the Principal Obligations, which notice shall specify the amount of Principal Obligations to be so converted, and whether such conversion is for Common Stock or Subsequent Round Securities. The date on which the Note is surrendered for conversion is referred to herein as the “Conversion Date.” As soon as practicable after the Conversion Date, the Payee shall be entitled to receive a certificate or certificates, registered in such name or names as the Payee may direct, representing the Conversion Securities issuable upon conversion of the applicable Principal Obligations, along with a new promissory note, in the same form as this Note, reflecting any Principal Obligations that have not been so converted and any obligations in respect of accrued and unpaid interest on converted Principal Obligations; provided that the Payee shall be treated for all purposes as the record holder of such Conversion Securities as of the Conversion Date. The issuance of Conversion Securities upon conversion of any Principal Obligations shall be made without charge to the Payee for any issuance tax in respect thereof; provided that the Payor shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the Payee.

(c) Reservation of Shares. Payor shall reserve and keep available solely for issuance upon the conversion of Principal Obligations such number of shares of Conversion Securities as will from time to time be sufficient to permit the conversion of all outstanding Principal Obligations, and, if applicable, shall take all action to increase the authorized number of Conversion Securities if at any time there shall be insufficient authorized but unissued Conversion Securities to permit such reservation or permit the conversion of all outstanding Principal Obligations. The Payor covenants that all Conversion Securities that shall be so issued shall be duly authorized, validly issued, fully paid and non-assessable by the Payor, not subject to any preemptive rights, and free from any taxes, liens and charges with respect to the issue thereof. The Payor will take all such action as may be necessary to ensure that all such

5

Conversion Securities may be so issued without violation of any applicable law or regulation, or any requirement of any national securities exchange or quotation system upon which the Common Stock may be listed.

(d) Certain Adjustments. The provisions of this paragraph (d) shall apply only to any conversion of this Note pursuant to Section 5(a)(ii).

(i) Stock Dividends, Subdivision, Combination or Reclassification of Common Stock. If at any time after the date of the issuance of this Note the Company shall (i) pay a dividend on Common Stock in shares of its capital stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock as the case may be, or (iv) issue by reclassification of its shares of Common Stock any shares of capital stock of the Company, then, on the record date for such dividend or the effective date of such subdivision or split-up, combination or reclassification, as the case may be, the number and kind of shares to be delivered upon conversion of this Note will be adjusted so that the Payee will be entitled to receive the number and kind of shares of capital stock that such Payee would have owned or been entitled to receive upon or by reason of such event had this Note been converted immediately prior thereto, and the Conversion Price will be adjusted as provided below in paragraph (d)(v).

(ii) Extraordinary Distributions. If at any time after the date of issuance of this Note, the Company shall distribute to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation and Common Stock is not changed or exchanged,) cash, evidences of indebtedness, securities or other assets (excluding (A) ordinary course cash dividends to the extent such dividends do not exceed the Company’s retained earnings and (B) dividends payable in shares of capital stock for which adjustment is made under paragraph (d)(i), above), or rights, options or warrants to subscribe for or purchase securities of the Company, then in each such case the number of shares of Common Stock to be delivered to such Payee upon conversion of this Note shall be increased so that the Payee thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Payee would have been entitled to receive immediately before such record date by a fraction, the denominator of which shall be the Conversion Price on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company in good faith) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights, options or warrants applicable to one share of the Common Stock (provided that such denominator shall in no event be less than $.01) and the numerator of which shall be the Conversion Price.

(iii) Reorganization, etc. If at any time after the date of issuance of this Note any consolidation of the Company with or merger of the Company with or into any other person (other than a merger or consolidation in which the Company is the surviving or continuing corporation and which does not result in any reclassification of, or change (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) in, outstanding shares of Common Stock) or any sale, lease or other transfer of all or substantially all of the assets of the Company to any other person

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(each, a “Reorganization Event”), shall be effected in such a way that the holders of the Common Stock shall be entitled to receive cash, stock, other securities or assets (whether such cash, stock, other securities or assets are issued or distributed by the Company or another person) with respect to or in exchange for the Common Stock, then this Note shall automatically become convertible only for the kind and amount of cash, stock, other securities or assets receivable upon such Reorganization Event by a holder of the number of shares of the Common Stock that such holder would have been entitled to receive upon conversion of this Note had this Note been converted immediately before such Reorganization Event, subject to adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5(d). The Company shall not enter into any of the transactions referred to in this paragraph (d)(iii) unless effective provision shall be made so as to give effect to the provisions set forth in this paragraph (d)(iii).

(iv) Carryover. Notwithstanding any other provision of this Section 5(d), no adjustment shall be made to the number of shares of either Common Stock to be delivered to the Payee (or to the Conversion Price) if such adjustment represents less than .05% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to .05% or more of the number of shares to be so delivered.

(v) Conversion Price Adjustment. Whenever the number of shares of Common Stock issuable upon the conversion of the Note is adjusted as provided pursuant to this Section 5(d), the Conversion Price payable upon the conversion of this Note shall be adjusted by multiplying such Conversion Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of shares of Common Stock issuable upon the conversion of this Note immediately prior to such adjustment, and of which the denominator shall be the number of shares of Common Stock issuable upon the conversion of this Note immediately thereafter; provided, however, that the Conversion Price shall in no event be less than the par value of a share of such Common Stock.

(vi) Notice of Adjustment. Whenever the number of shares of Common Stock issuable upon the conversion of this Note or the Conversion Price is adjusted as herein provided, the Company shall promptly mail by first class mail, postage prepaid, to the Payee, notice of such adjustment or adjustments setting forth the number of shares of Common Stock issuable upon the conversion of this Note and the Conversion Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

(e) Certain Definitions. For purposes of this Note, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa):

“Conversion Securities” means Common Stock or Subsequent Round Securities, as applicable.

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“Permitted Refinancing” means the incurrence of any indebtedness of the Company or any of its subsidiaries in exchange for, or the net proceeds of which are used to refinance indebtedness of the Company or any of its subsidiaries incurred pursuant to the Credit Agreement, provided that the aggregate amount committed by the lenders in any such refinancing indebtedness is not greater than 110% of the aggregate amount committed by the lenders under the Credit Agreement that is being so refinanced, plus the amount of any fees and expenses associated therewith.

“Subsequent Round of Financing” means the offer and sale for cash by the Company of its equity securities resulting in proceeds to the Company of at least $7,500,000 (excluding for this purpose any proceeds received by the Company on account of the conversion of any notes, including this Note, or the exercise of any warrants, in each case, whether currently outstanding or hereafter issued).

“Subsequent Round Securities” means the equity securities sold in the Subsequent Round of Financing; provided that, to the extent that two or more types or classes of equity securities are sold as a unit in the Subsequent Round of Financing, “Subsequent Round Securities” shall mean a unit consisting of the same types or classes of equity securities, in the same proportion, as the units sold in the Subsequent Round of Financing.

6. Financial Covenant. For so long as this Note remains outstanding, the Company shall at all times maintain Total Current Assets (as reflected in the financial statements of the Company filed from time to time with the United States Securities and Exchange Commission and prepared in accordance with GAAP) in excess of $20,000,000. “Total Current Assets” means cash, marketable securities, accounts receivable, inventory (including prepaid inventory), prepaid expenses and other current items as reflected in the line item entitled “Total Current Assets” on the consolidated balance sheet of the Company and its subsidiaries that will be converted into cash within 12 months of the date of such consolidated balance sheet, calculated on a net basis consistent with the Company’s past practice with respect to calculation of “Total Current Assets.”

7. Suits for Enforcement.

(a) Upon the occurrence of any one or more Events of Default, subject to the Intercreditor Agreement, the holder of this Note may proceed to protect and enforce its rights by suit in equity, action at law or by other appropriate proceeding in aid of the exercise of any power granted in this Note, or may proceed to enforce the payment of this Note, or to enforce any other legal or equitable right it may have as a holder of this Note.

(b) The holder of this Note may direct the time, method and place of conducting any proceeding for any remedy available to itself.

(c) In case of any Event of Default, the Payor will pay to the holder of this Note such amounts as shall be sufficient to cover the reasonable costs and expenses of such holder due to such Event of Default, including without limitation, costs of collection and reasonable fees, disbursements and other charges of counsel incurred in connection with any action in which the holder prevails.

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8. Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in accordance with the provisions of the Note and Warrant Purchase Agreement, dated as of the date hereof, by and among the Payor and the investors party thereto.

9. Successors and Assigns. This Note shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. The Payor may not assign any of its rights or obligations under this Note without the prior written consent of Payee. The Payee may assign all or a portion of their rights or obligations under this Note to an affiliate without the prior written consent of the Payor.

10. Amendment and Waiver.

(a) No failure or delay on the part of the Payor or Payee in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Payor or Payee at law, in equity or otherwise.

(b) Any amendment, supplement or modification of or to any provision of this Note, any waiver of any provision of this Note and any consent to any departure by the Payor from the terms of any provision of this Note, shall be effective (i) only if it is made or given in writing and signed by the Payor and the Payee and (ii) only in the specific instance and for the specific purpose for which made or given.

11. Headings. The headings in this Note are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

12. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

13. Costs and Expenses. The Payor hereby agrees to pay on demand all reasonable out-of-pocket costs, fees, expenses, disbursements and other charges (including but not limited to the reasonable fees, expenses, disbursements and other charges of counsel to the Payee) of the Payee arising in connection with any consent or waiver granted or requested hereunder or in connection herewith, and any renegotiation, amendment, work-out or settlement of this Note or the indebtedness arising hereunder.

14. Waiver of Jury Trial and Setoff. The Payor hereby waives trial by jury in any litigation in any court with respect to, in connection with, or arising out of this Note or any instrument or document delivered pursuant to this Note, or the validity, protection, interpretation, collection or enforcement thereof, or any other claim or dispute howsoever arising, between any

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Payor and the Payee; and the Payor hereby waives the right to interpose any setoff or counterclaim or cross-claim in connection with any such litigation, irrespective of the nature of such setoff, counterclaim or cross-claim except to the extent that the failure so to assert any such setoff, counterclaim or cross-claim would permanently preclude the prosecution of the same.

15. Consent to Jurisdiction. The Payor hereby irrevocably consents to the nonexclusive jurisdiction of the courts of the State of New York and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Note or any document or instrument delivered pursuant to this Agreement.

16. Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

17. Entire Agreement. This Note is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein. This Note supersedes all prior agreements and understandings between the parties with respect to such subject matter.

18. Further Assurances. The Payor shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any governmental authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Note.

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IN WITNESS WHEREOF, the Payor has executed and delivered this Secured Subordinated Convertible Promissory Note on the date first above written.

BLUEFLY, INC.
By:	/s/ Joseph Park
Name:	Joseph Park
Title:	CEO

Agreed to and accepted as of the date

first written above:

RHO VENTURES VI, L.P.
By:	RMV VI, L.L.C., its General Partner
By:	Rho Capital Partners LLC, its Managing Member
By:	/s/ Jeffrey Martin
Name:	Jeffrey Martin
Title:	Attorney-in-Fact

EX-99.10

Exhibit 10

Execution Version

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT OR LAWS AND NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.

WARRANT NO. 2

WARRANT

TO PURCHASE SHARES OF COMMON STOCK

OF

BLUEFLY, INC.

THIS IS TO CERTIFY THAT RHO VENTURES VI, L.P., a Delaware limited partnership, or its registered assigns (the “Holder”), is the owner of the right to subscribe for and to purchase from BLUEFLY, INC., a Delaware corporation (the “Company”), Four Hundred Seventy Six Thousand One Hundred Ninety (476,190) (the “Number Issuable”), fully paid, duly authorized and non-assessable shares of Common Stock at a price per share of $1.05 (the “Exercise Price”), at any time, in whole or in part, on or after August 13, 2012 (the “Effective Date”) through 5:00 PM New York City time, on August 13, 2019 (the “Expiration Date”) all on the terms and subject to the conditions hereinafter set forth (the “Warrants”).

The Number Issuable and the Exercise Price are subject to further adjustment from time to time pursuant to the provisions of Section 2 of this Warrant Certificate.

Capitalized terms used herein but not otherwise defined shall have the meanings given to them in Section 12 hereof.

Section 1. Exercise of Warrants.

(a) Subject to paragraphs (d) and (e) of this Section 1, the Warrants evidenced hereby may be exercised, in whole or in part, by the Holder hereof at any time or from time to time, on or after the Effective Date and on or prior to the Expiration Date upon delivery to the Company at the principal executive office of the Company in the United States of America, of (A) this Warrant Certificate, (B) a written notice stating that such Holder elects to exercise the Warrants evidenced hereby in accordance with the provisions of this Section 1 and specifying the number of Warrants being exercised and the name or names in which the Holder wishes the certificate or certificates for shares of Common Stock to be issued and (C) payment of the Exercise

Price for such Warrants, which shall be payable by any one or any combination of the following: (i) cash; (ii) certified or official bank check payable to the order of the Company; (iii) by the surrender (which surrender shall be evidenced by cancellation of the number of Warrants represented by any Warrant Certificate presented in connection with a Cashless Exercise (as defined below)) of a Warrant or Warrants (represented by one or more relevant Warrant Certificates), and without the payment of the Exercise Price in cash, in return for the delivery to the surrendering Holder of such number of shares of Common Stock equal to the number of shares of the Common Stock for which such Warrant is exercisable as of the date of exercise (if the Exercise Price were being paid in cash or certified or official bank check) reduced by that number of shares of Common Stock equal to the quotient obtained by dividing (x) the aggregate Exercise Price (assuming no Cashless Exercise) to be paid by (y) the Market Price of one Share of Common Stock on the Business Day which immediately precedes the day of exercise of the Warrant; or (iv) by the delivery of shares of the Common Stock having a value (as defined by the next sentence) equal to the aggregate Exercise Price to be paid, that are either held by the Holder or are acquired in connection with such exercise, and without payment of the Exercise Price in cash. Any share of Common Stock delivered as payment for the Exercise Price in connection with an In-Kind Exercise (as defined below) shall be deemed to have a value equal to the Market Price of one Share of Common Stock on the Business Day that immediately precedes the day of exercise of the Warrants. An exercise of a Warrant in accordance with clause (iii) is herein referred to as a “Cashless Exercise” and an exercise of a Warrant in accordance with clause (iv) is herein referred to as an “In-Kind Exercise.” The documentation and consideration, if any, delivered in accordance with subsections (A), (B) and (C) are collectively referred to herein as the “Warrant Exercise Documentation.”

(b) As promptly as practicable, and in any event within five (5) Business Days after receipt of the Warrant Exercise Documentation, the Company shall deliver or cause to be delivered (A) certificates representing the number of validly issued, fully paid and nonassessable shares of Common Stock specified in the Warrant Exercise Documentation, (B) if applicable, cash in lieu of any fraction of a share, as hereinafter provided, and (C) if less than the full number of Warrants evidenced hereby are being exercised or used in a Cashless Exercise, a new Warrant Certificate or Certificates, of like tenor, for the number of Warrants evidenced by this Warrant Certificate, less the number of Warrants then being exercised and/or used in a Cashless Exercise. Such exercise shall be deemed to have been made at the close of business on the date of delivery of the Warrant Exercise Documentation so that the Person entitled to receive shares of Common Stock upon such exercise shall be treated for all purposes as having become the record holder of such shares of Common Stock at such time.

(c) The Company shall pay all expenses incurred by the Company in connection with and taxes and other governmental charges (other than income taxes of the Holder) that may be imposed in respect of, the issue or delivery of any shares of Common Stock issuable upon the exercise of the Warrants evidenced hereby. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock, as the case may be, in any name other than that of the registered holder of the Warrant evidenced hereby.

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(d) In connection with the exercise of any Warrants evidenced hereby, no fractions of shares of Common Stock shall be issued, but in lieu thereof the Company shall pay a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Market Price for one Share of Common Stock on the Business Day which immediately precedes the day of exercise. If more than one (1) such Warrant shall be exercised by the holder thereof at the same time, the number of full shares of Common Stock issuable on such exercise shall be computed on the basis of the total number of Warrants so exercised.

(e) Notwithstanding anything to the contrary contained herein, the Holder and the Company acknowledge and agree that these Warrants shall not become exercisable until the Stockholder Approval has been obtained. The Company shall take such actions as are reasonably necessary to obtain the Stockholder Approval through an action by majority written consent of the stockholders in accordance with Section 1.3 of that certain Note and Warrant Purchase Agreement, dated as of the date hereof, by and among the Company, the Holder and Prentice Consumer Partners, LP. “Stockholder Approval” means such approval of the stockholders of the Company as may be necessary under the rules of the NASDAQ Capital Market or any other national securities exchange or quotation system upon which the Common Stock may be listed from time to time, in order to permit the exercise in full of the Warrants.

Section 2. Certain Adjustments.

(a) The number of shares of Common Stock purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment as follows:

(i) Stock Dividends, Subdivision, Combination or Reclassification of Common Stock. If at any time after the date of the issuance of this Warrant the Company shall (i) pay a dividend on Common Stock in shares of its capital stock, (ii) combine its outstanding shares of Common Stock into a smaller number of shares, (iii) subdivide its outstanding shares of Common Stock as the case may be, or (iv) issue by reclassification of its shares of Common Stock any shares of capital stock of the Company, then, on the record date for such dividend or the effective date of such subdivision or split-up, combination or reclassification, as the case may be, the number and kind of shares to be delivered upon exercise of this Warrant will be adjusted so that the Holder will be entitled to receive the number and kind of shares of capital stock that such Holder would have owned or been entitled to receive upon or by reason of such event had this Warrant been exercised immediately prior thereto, and the Exercise Price will be adjusted as provided below in paragraph 2(a)(v).

(ii) Extraordinary Distributions. If at any time after the date of issuance of this Warrant, the Company shall distribute to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in

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which the Company is the continuing or surviving corporation and Common Stock is not changed or exchanged) cash, evidences of indebtedness, securities or other assets (excluding (A) ordinary course cash dividends to the extent such dividends do not exceed the Company’s retained earnings and (B) dividends payable in shares of capital stock for which adjustment is made under Section 2(a)(i)), or rights, options or warrants to subscribe for or purchase securities of the Company, then in each such case the number of shares of Common Stock to be delivered to such Holder upon exercise of this Warrant shall be increased so that the Holder thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Holder would have been entitled to receive immediately before such record date by a fraction, the denominator of which shall be the Exercise Price on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company in good faith) of the portion of the cash, evidences of indebtedness, securities or other assets so distributed or of such rights or warrants applicable to one share of the Common Stock (provided that such denominator shall in no event be less than $.01) and the numerator of which shall be the Exercise Price.

(iii) Reorganization, etc. If at any time after the date of issuance of this Warrant any consolidation of the Company with or merger of the Company with or into any other Person (other than a merger or consolidation in which the Company is the surviving or continuing corporation and which does not result in any reclassification of, or change (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) in, outstanding shares of Common Stock) or any sale, lease or other transfer of all or substantially all of the assets of the Company to any other person (each, a “Reorganization Event”), shall be effected in such a way that the holders of the Common Stock shall be entitled to receive cash, stock, other securities or assets (whether such cash, stock, other securities or assets are issued or distributed by the Company or another Person) with respect to or in exchange for the Common Stock, then this Warrant shall automatically become exercisable only for the kind and amount of cash, stock, other securities or assets receivable upon such Reorganization Event by a holder of the number of shares of the Common Stock that such holder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately before such Reorganization Event, subject to adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2(a). The Company shall not enter into any of the transactions referred to in this Section 2(a)(iii) unless effective provision shall be made so as to give effect to the provisions set forth in this Section 2(a)(iii).

(iv) Carryover. Notwithstanding any other provision of this Section 2(a), no adjustment shall be made to the number of shares of either Common Stock to be delivered to the Holder (or to the Exercise Price) if such adjustment represents less than .05% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to .05% or more of the number of shares to be so delivered.

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(v) Exercise Price Adjustment. Whenever the Number Issuable upon the exercise of the Warrant is adjusted as provided pursuant to this Section 2(a), the Exercise Price per share payable upon the exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the Number Issuable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the Number Issuable immediately thereafter; provided, however, that the Exercise Price for each Share of the Common Stock shall in no event be less than the par value of a share of such Common Stock.

(b) Notice of Adjustment. Whenever the Number Issuable or the Exercise Price is adjusted as herein provided, the Company shall promptly mail by first class mail, postage prepaid, to the Holder, notice of such adjustment or adjustments setting forth the Number Issuable and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

Section 3. No Redemption. The Company shall not have any right to redeem any of the Warrants evidenced hereby.

Section 4. Notice of Certain Events. In case at any time or from time to time (i) the Company shall declare any dividend or any other distribution to all holders of Common Stock, (ii) the Company shall authorize the granting to the holders of Common Stock of rights or warrants to subscribe for or purchase any additional shares of stock of any class or any other right, (iii) the Company shall authorize the issuance or sale of any other shares or rights which would result in an adjustment to the Number Issuable pursuant to Section 2(a)(i), (ii) or (iii), (iv) there shall be any capital reorganization or reclassification of Common Stock of the Company or consolidation or merger of the Company with or into another Person, or any sale or other disposition of all or substantially all the assets of the Company, or (v) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then, in any one or more of such cases the Company shall mail to the Holder at such Holder’s address as it appears on the transfer books of the Company, as promptly as practicable but in any event at least 10 days prior to the date on which the transactions contemplated in Section 2(a)(i), (ii) or (iii) a notice stating (a) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants or, if a record is not to be taken, the date as of which the holders of record of either Common Stock to be entitled to such dividend, distribution, rights or warrants are to be determined, or (b) the date on which such reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up is expected to become effective. Such notice also shall specify the date as of which it is expected that the holders of record of the Common Stock shall be entitled to exchange the Common Stock for shares of stock or other securities or property or cash deliverable upon such reorganization, reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.

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Section 5. Certain Covenants. The Company covenants and agrees that all shares of Common Stock of the Company which may be issued upon the exercise of the Warrants evidenced hereby will be duly authorized, validly issued and fully paid and nonassessable. The Company shall at all times reserve and keep available for issuance upon the exercise of the Warrants, such number of its authorized but unissued shares of Common Stock as will from time to time be sufficient to permit the exercise of all outstanding Warrants, and shall take all action required to increase the authorized number of shares of Common Stock if at any time there shall be insufficient authorized but unissued shares of Common Stock to permit such reservation or to permit the exercise of all outstanding Warrants.

Section 6. Registered Holder. The persons in whose names this Warrant Certificate is registered shall be deemed the owner hereof and of the Warrants evidenced hereby for all purposes. The registered Holder of this Warrant Certificate, in their capacity as such, shall not be entitled to any rights whatsoever as a stockholder of the Company, except as herein provided.

Section 7. Transfer of Warrants. Any transfer of the rights represented by this Warrant Certificate shall be effected by the surrender of this Warrant Certificate, along with the form of assignment attached hereto, properly completed and executed by the registered Holder hereof, at the principal executive office of the Company in the United States of America, together with an appropriate investment letter and opinion of counsel, if deemed reasonably necessary by counsel to the Company to assure compliance with applicable securities laws. Thereupon, the Company shall issue in the name or names specified by the registered Holder hereof and, in the event of a partial transfer, in the name of the registered Holder hereof, a new Warrant Certificate or Certificates evidencing the right to purchase such number of shares of Common Stock as shall be equal to the number of shares of Common Stock then purchasable hereunder.

Section 8. Denominations. The Company covenants that it will, at its expense, promptly upon surrender of this Warrant Certificate at the principal executive office of the Company in the United States of America, execute and deliver to the registered Holder hereof a new Warrant Certificate or Certificates in denominations specified by such Holder for an aggregate number of Warrants equal to the number of Warrants evidenced by this Warrant Certificate.

Section 9. Replacement of Warrants. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant Certificate and, in the case of loss, theft or destruction, upon delivery of an indemnity reasonably satisfactory to the Company (in the case of an insurance company or other institutional investor, its own unsecured indemnity agreement shall be deemed to be reasonably satisfactory), or, in the case of mutilation, upon surrender and cancellation thereof, the Company will issue a new Warrant Certificate of like tenor for a number of Warrants equal to the number of Warrants evidenced by this Warrant Certificate.

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Section 10. Governing Law. THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

Section 11. Rights Inure to Registered Holder. The Warrants evidenced by this Warrant Certificate will inure to the benefit of and be binding upon the registered Holder thereof and the Company and their respective successors and permitted assigns. Nothing in this Warrant Certificate shall be construed to give to any Person other than the Company and the registered Holder thereof any legal or equitable right, remedy or claim under this Warrant Certificate, and this Warrant Certificate shall be for the sole and exclusive benefit of the Company and such registered Holder. Nothing in this Warrant Certificate shall be construed to give the registered Holder hereof any rights as a Holder of shares of either Common Stock until such time, if any, as the Warrants evidenced by this Warrant Certificate are exercised in accordance with the provisions hereof.

Section 12. Definitions. For the purposes of this Warrant Certificate, the following terms shall have the meanings indicated below:

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York, New York are authorized or required by law or executive order to close.

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock (or equivalent ownership interests in a Person not a corporation) whether now outstanding or hereafter issued, including, without limitation, any rights, warrants or options to purchase such Person’s capital stock.

“Common Stock” shall mean the common stock of the Company.

“Market Price” shall mean, per share of Common Stock, on any date specified herein: (i) if the shares of Common Stock are traded on the NASDAQ Capital Market, the last bid price reported on that date; (ii) if the shares of Common Stock are no longer quoted on NASDAQ Capital Market and are listed on any other national securities exchange, the last sale price of the Common Stock reported by such exchange on that date; (iii) if the shares of Common Stock are not quoted on a any such market or listed on any such exchange and the shares of Common Stock are traded in the over-the-counter market, the last price reported on such day by the OTC Bulletin Board; (iv) if the shares of Common Stock are not quoted on any such market, listed on any such exchange or quoted on the OTC Bulletin Board, then the last price quoted on such day in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); or (v) if none of clauses (i)-(iv) are applicable, then as determined, in good faith, by the Board of Directors of the Company.

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“Person” shall mean any individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

Section 13. Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, courier services or personal delivery, (a) if to the Holder of a Warrant, at such Holder’s last known address appearing on the books of the Company; and (b) if to the Company, at its principal executive office in the United States, or such other address as shall have been furnished to the party given or making such notice, demand or other communication. All such notices and communications shall be deemed to have been duly given: (i) when delivered by hand, if personally delivered; (ii) when delivered to a courier if delivered by commercial overnight courier service; and (iii) five (5) Business Days after being deposited in the mail, postage prepaid, if mailed.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed as of this 13^th day of August 2012.

BLUEFLY, INC.
By:	/s/ Joseph Park
	Name:  Joseph Park
	Title:    CEO

ACCEPTED AND AGREED TO
AS OF AUGUST     , 2012:
RHO VENTURES VI, L.P.
By:	RMV VI, L.L.C., its General Partner
By:	Rho Capital Partners LLC, its Managing Member
By:	/s/ Jeffrey Martin
	Name: Jeffrey Martin
	Title: Attorney-in-Fact

Signature Page to Rho Warrant

[Form of Assignment Form]

[To be executed upon assignment of Warrants]

The undersigned hereby assigns and transfers this Warrant Certificate to                                      whose Social Security Number or Tax ID Number is                                          and whose record address is                                                              , and irrevocably appoints                                     

as agent to transfer this security on the books of the Company. Such agent may substitute another to act for such agent.

Signature:

Signature Guarantee:

Date:

EX-99.11

Exhibit 11

INTERCREDITOR AGREEMENT

This Intercreditor Agreement (this “Agreement”) is made as of August 13, 2012 by and among (i) Prentice Consumer Partners, L.P., a Delaware limited partnership (“Prentice”) and Rho Ventures VI, L.P., a Delaware limited partnership (“Rho”, and together with Prentice, the “Junior Creditors”, and each, a “Junior Creditor”), (ii) Wells Fargo Bank, National Association (the “Senior Creditor”) and (iii) Bluefly, Inc., a Delaware corporation (“Bluefly”) and EVT Acquisition Co., LLC, a New York limited liability company (together with Bluefly, collectively, the “Borrowers”).

W I T N E S S E T H

WHEREAS, reference is made to that certain Credit Agreement dated as of June 17, 2011 (as amended, modified, supplemented or restated and in effect from time to time, the “Senior Credit Agreement”) between the Borrowers and the Senior Creditor, as Lender and L/C Issuer, pursuant to which the Senior Creditor has agreed to extend credit to the Borrowers upon the terms and subject to the conditions specified in the Credit Agreement. All of the Borrowers’ obligations under the Senior Credit Agreement and the other Senior Loan Documents (as defined below) are secured by liens on and security interests in substantially all of the now existing and hereafter acquired personal property assets of the Borrowers granted to the Senior Creditor (the “Collateral”).

WHEREAS, reference is further made to that certain Note and Warrant Purchase Agreement dated as of August 13, 2012 (as amended, modified, supplemented or restated and in effect from time to time, the “Junior Credit Agreement”) by and among Bluefly and Prentice and Rho, as Investors, pursuant to which Bluefly has issued, among other securities, (a) $1,500,000 in the aggregate principal amount of secured subordinated notes to Prentice and (b) $1,500,000 of secured convertible subordinated notes to Rho. All of Bluefly’s obligations under the Junior Credit Agreement and the other Junior Loan Documents (as defined below) are secured by liens on and security interests in the Collateral.

WHEREAS, pursuant to the terms of the Senior Credit Agreement, the Junior Creditors and the Borrowers are required to enter into this Agreement with the Senior Creditor.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Definitions. The following terms shall have the following meanings in this Agreement. All other terms not defined herein shall have the meanings ascribed to them in the Senior Credit Agreement.

“Bankruptcy Code” shall mean Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder.

“Collateral” has the meaning set forth in the Recitals.

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“Distribution” means, with respect to any indebtedness, obligation or security, including the Junior Debt, (a) any payment or distribution by any Person of cash, securities or other property, by set-off or otherwise, on account of such indebtedness, obligation or security, or (b) any redemption, purchase or other acquisition of such indebtedness, obligation or security by any Person.

“Enforcement Action” shall mean (a) to take from or for the account of any Person, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by any such Person with respect to the Junior Debt, (b) to sue for payment of, or to initiate or participate with others in any suit, action or proceeding against any Person to (i) enforce payment of or to collect the whole or any part of the Junior Debt or (ii) commence judicial enforcement of any of the rights and remedies under the Junior Loan Documents or applicable law with respect to the Junior Debt, (c) to accelerate the Junior Debt, (d) to cause the Borrowers or any guarantor to honor any redemption or mandatory prepayment obligation under the Junior Loan Documents, (e) to notify account debtors or directly collect accounts receivable or other payment rights of the Borrowers or any guarantor or (f) to take any action under the provisions of any state or federal law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell the Collateral.

“Identified Senior Event of Default” shall mean any Event of Default described in Section 8.01 of the Senior Credit Agreement other than an Event of Default under Section 8.01(e) (Cross-Default) that is exclusively the result of the occurrence of a Junior Event of Default under the Junior Loan Documents.

“Insolvency Proceeding” shall mean, as to any Person, any of the following: any case or proceeding with respect to such Person under the Bankruptcy Code or any other federal or state bankruptcy, insolvency, reorganization or other law affecting creditors’ rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person or any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or any of its assets or any proceeding for liquidation, dissolution or other winding up of the business of such Person or any assignment for the benefit of creditors or any marshalling of assets of such Person.

“Junior Credit Agreement” has the meaning set forth in the Recitals.

“Junior Debt” shall mean all of the obligations of the Borrowers to any Junior Creditor, whether now existing or hereafter arising and evidenced by or incurred pursuant to the Junior Loan Documents.

“Junior Event of Default” shall mean any “Event of Default” as such term is defined in the Junior Loan Documents.

“Junior Loan Documents” shall mean the Junior Credit Agreement and all agreements, documents and instruments entered into in connection therewith.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or otherwise), security agreement or transfer intended as security, including without limitation, any conditional

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sale or other title retention agreement, the interests of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.

“Paid in Full” shall mean that, with respect to the Obligations under the Senior Loan Documents, (a) all of such Obligations (other than contingent obligations or indemnification obligations for which no underlying claim has been asserted) have been indefeasibly paid, performed or discharged in full (with all such Obligations consisting of monetary or payment obligations having been paid in full in cash), (b) no Person has any further right to obtain any loans, letters of credit or other extensions of credit under the documents relating to such Obligations and (c) any and all letters of credit or similar instruments issued under such documents have been cancelled and returned (or backed by stand-by guarantees or cash collateralized) in accordance with the terms of such documents.

“Permitted Distributions” means the repayment, repurchase, redemption or defeasance of any Junior Debt owed to either Prentice or Rho under the Junior Loan Documents, including, without limitation, any scheduled payments of interest thereunder that may be payable to Prentice.

“Person” means any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

“Refinancing Senior Loan Documents” shall mean any financing documentation which replaces the Senior Loan Documents and pursuant to which any Senior Debt under any of the Senior Loan Documents is refinanced, as such financing documentation may be amended, supplemented or otherwise modified from time to time.

“Senior Credit Agreement” has the meaning set forth in the Recitals.

“Senior Debt” shall mean all obligations, liabilities and indebtedness of every nature of the Borrowers from time to time owed to the Senior Creditor under the Senior Loan Documents, including, without limitation, the Obligations (as defined in the Senior Credit Agreement), any debtor-in-possession financing furnished by the Senior Creditor after the commencement of an Insolvency Proceeding, together with (a) any amendments, modifications, renewals or extensions thereof and (b) any interest, fees and other charges accruing thereon or due or to become due with respect thereto after the commencement of any Insolvency Proceeding, without regard to whether or not such interest, fees and other charges is an allowed claim. Senior Debt shall be considered to be outstanding whenever any commitment under any Senior Loan Document is outstanding.

“Senior Loan Documents” shall mean the Senior Credit Agreement and all “Loan Documents” (as defined in the Senior Credit Agreement) and, after any refinancing of the Senior Debt under the Senior Loan Documents, the applicable Refinancing Senior Loan Documents.

All terms defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts (the “UCC”) on the date hereof, unless otherwise defined herein, shall have the meanings set forth therein. All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural. All references to sections, clauses or paragraphs shall be references to sections, clauses and paragraphs in this Agreement unless otherwise stated.

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2. Subordination.

a. 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.

b. Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release Liens.

i. 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. 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.

iii. 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.

3. Standstill Provisions. Until the Senior Debt has been Paid in Full, the Senior Creditor shall have the exclusive right to manage, perform and enforce (or not enforce) the terms of the Senior Loan Documents with respect to the Collateral, to exercise and enforce all privileges and rights thereunder according to its discretion and the exercise of its business judgment, including, without limitation, the exclusive right to take or retake control or possession of any Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate any Collateral. In that regard, no Junior Creditor shall, without the prior written consent of the Senior Creditor, take any Enforcement Action with respect to any Junior Debt or the Collateral; provided, however, that upon the occurrence of a Junior Event of Default where the circumstances giving rise to such Junior Event of Default do not constitute an Identified Senior Event of Default, then the Junior Creditors shall have the right, without the prior written consent of the Senior Creditor, to accelerate the Junior Debt and, so long as the Payment Conditions have

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been satisfied, receive Permitted Distributions from the Borrowers in respect thereof in accordance with the terms of the Junior Loan Documents. Notwithstanding the foregoing, each Junior Creditor may, subject to Section 8 of this Agreement, file and defend proofs of claim against any Borrower in any Insolvency Proceeding involving such Borrower. Any Distributions or other proceeds of any Enforcement Action obtained by any Junior Creditor in violation of the foregoing prohibition shall in any event be held in trust by it for the benefit of the Senior Creditor and promptly paid or delivered to the Senior Creditor in the form received until all Senior Debt has been Paid in Full. Each Junior Creditor waives any and all rights to affect the method or challenge the appropriateness of any action by the Senior Creditor with respect to management, performance and enforcement of the Senior Loan Documents and the enforcement and exercise of all privileges, rights and remedies. The Senior Creditor shall not have any liability to any Junior Creditor in respect of any Junior Creditor’s failure to obtain repayment in full of the Junior Debt.

4. No Subrogation. No Junior Creditor shall be subrogated to the rights of the Senior Creditor with respect to receipt of Distributions on account of the Junior Debt unless and until all of the Senior Debt shall have been Paid in Full. For the purposes of such subrogation, no Distributions made to the holders of the Senior Debt to which any Junior Creditor would be entitled except for this Agreement and no payments made pursuant to the provisions of this Agreement to the Senior Creditor by such Junior Creditor shall, as among the Borrowers, their creditors and such Junior Creditor, be deemed to be a payment by the Borrowers to or on account of the Junior Debt. Each Junior Creditor agrees that in the event that all or any part of a payment made with respect to the Senior Debt is recovered from the holders of the Senior Debt in an Insolvency Proceeding or otherwise, any Distribution received by such Junior Creditor with respect to the Junior Debt at any time after the date of the payment that is so recovered, whether pursuant to the right of subrogation provided for in this Agreement or otherwise, shall be deemed to have been received by such Junior Creditor in trust as property of the holders of the Senior Debt and such Junior Creditor shall forthwith deliver the same to the Senior Creditor for application to the Senior Debt, until the Senior Debt has been paid in full.

5. Modifications and Amendments.

a. 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.

b. 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

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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.

6. Waiver of Certain Rights by Junior Creditors.

a. 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.

b. 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.

c. 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.

d. 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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7. Representations and Warranties.

a. Each Junior Creditor hereby represents and warrants to the Senior Creditor that as of the date hereof : (a) such Junior Creditor has the power and authority to enter into, execute, deliver, and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (b) the execution of this Agreement by such Junior Creditor will not violate or conflict with the organizational documents of such Junior Creditor, the Junior Loan Documents or any law, regulation or order or require any consent or approval which has not been obtained; and (c) this Agreement is the legal, valid, and binding obligation of such Junior Creditor, enforceable against such Junior Creditor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles.

b. The Senior Creditor hereby represents and warrants to each Junior Creditor that as of the date hereof : (a) the Senior Creditor has the power and authority to enter into, execute, deliver, and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (b) the execution of this Agreement by the Senior Creditor will not violate or conflict with the organizational documents of the Senior Creditor, the Senior Loan Documents or any law, regulation or order or require any consent or approval which has not been obtained; and (c) this Agreement is the legal, valid, and binding obligation of the Senior Creditor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles.

8. Liquidation, Dissolution, Bankruptcy.

a. 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.

b. In the event of any Insolvency Proceeding involving any Borrower:

i. 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.

ii. 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,

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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.

iii. 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.

iv. 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. 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.

vi. 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.

vii. 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

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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.

9. Miscellaneous.

a. No impairment. No right of the Senior Creditor to enforce the provisions hereof shall at any time in any way be prejudiced or impaired by any act taken in good faith, or failure to act, which failure to act is in good faith, by the Senior Creditor or by any noncompliance by the Borrowers with the terms and provisions and covenants herein. Each Junior Creditor and each Borrower agree not to take any action to avoid or to seek to avoid the observance and performance of the terms and conditions hereof, and shall at all times in good faith carry out all such terms and conditions.

b. Junior Debt Not Affected. The subordination provisions of this Agreement are and are intended solely for the purposes of defining the relative rights of the Junior Creditors, on the one hand, and the Senior Creditor, on the other hand, as among themselves. As between the Borrowers and the Junior Creditors, nothing contained herein shall impair the unconditional and absolute obligation of the Borrowers to the Junior Creditors to pay the Junior Debt as such Junior Debt shall become due and payable. No person other than the Senior Creditor and the Junior Creditors and their respective successors and assigns shall have any rights hereunder.

c. Continuing Subordination; Termination of Agreement. This is a continuing agreement of subordination and the Senior Creditor may continue, at any time and without notice to the Junior Creditors, to extend credit or other financial accommodations and loan monies to or for the benefit of the Borrowers on the faith hereof. This Agreement shall remain in full force and effect until the Senior Debt has been Paid in Full, after which this Agreement shall terminate without further action on the part of the parties hereto.

d. Amendments; Modifications. This Agreement constitutes the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to the subject matter hereof. Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by the Senior Creditor and the Junior Creditors, and then such modification, waiver, or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

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e. Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.

f. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of the Senior Creditor the Junior Creditors, and the Borrowers. To the extent permitted under the Senior Loan Documents, the Senior Creditor may, from time to time, without notice to the Junior Creditors, assign or transfer any or all of the Senior Debt or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes of this Agreement, and every permitted assignee or transferee of any of the Senior Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the Senior Debt, be entitled to rely upon and be the third party beneficiary of the subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto. Each Junior Creditor further acknowledges that this Agreement will inure to the benefit of any third Person who refinances or succeeds to or replaces any or all of the Senior Debt, whether such successor financing or replacement occurs by transfer, assignment or repayment without the necessity of any further writing; however, each Junior Creditor agrees, upon request of such third Person, to execute and deliver an agreement with such Person containing terms substantially identical to those contained herein (subject to changing names of parties, documents and addresses, as appropriate).

g. Conflict. In the event of any conflict between any term, covenant, or condition of this Agreement and any term, covenant or condition of the Junior Loan Documents, the provisions of this Agreement shall control and govern.

h. Senior Creditor’s Rights and Remedies. The rights, remedies, powers, privileges, and discretions of the Senior Creditor hereunder (hereinafter, the “Senior Creditor’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it would otherwise have. No delay or omission by the Senior Creditor in exercising or enforcing any of the Senior Creditor’s Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Senior Creditor of any of the Senior Creditor’s Rights and Remedies or of any default or remedy under any other agreement with the Borrowers or any Junior Creditor shall operate as a waiver of any other default hereunder or thereunder. No exercise of the Senior Creditor’s Rights and Remedies and no other agreement or transaction, of whatever nature, entered into between the Senior Creditor and the Junior Creditors and/or between the Senior Creditor and the Borrowers at any time shall preclude any other or further exercise of the Senior Creditor’s Rights and Remedies. No waiver by the Senior Creditor of any of the Senior Creditor’s Rights and Remedies on any one occasion shall be deemed a continuing waiver. All of the Senior Creditor’s Rights and Remedies and all of the Senior Creditor’s rights, remedies, powers, privileges, and discretions under any other agreement with the Junior Creditors and/or the Borrowers shall be cumulative, and not alternative or exclusive, and may be

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exercised by the Senior Creditor at such time or times and in such order of preference as the Senior Creditor in its sole discretion may determine.

i. Headings. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation of any of the provisions hereof.

j. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement.

k. Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement.

l. Specific Performance. The Senior Creditor may demand specific performance of this Agreement. The Junior Creditors and each Borrower each hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by the Senior Creditor.

m. Expenses. In the event that the Senior Creditor undertakes any action that is reasonably necessary in order to enforce the provisions of this Agreement (whether or not suit is commenced), the Junior Creditors and the Borrowers shall pay all reasonable costs and expenses incurred by such Senior Creditor in connection therewith, including, without limitation, reasonable attorneys’ fees.

n. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

o. Jurisdiction; Consent to Service of Process.

i. 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

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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.

ii. 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.

iii. 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.

p. 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

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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.

q. 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:

i. 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);

ii. 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);

iii. 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

iv. 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);

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

[SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date above first written.

JUNIOR CREDITORS: PRENTICE CONSUMER PARTNERS, LP
By:	/s/ Mario Ciampi
	Name: Mario Ciampi Title:   Managing Member

RHO VENTURES VI, L.P.
By:	RMV VI, L.L.C., its general partner
By:	Rho Capital Partners LLC, its Managing Member
By:	/s/ Jeffrey Martin
	Name: Jeffrey Martin Title:   Attorney-in-Fact

SENIOR CREDITOR: WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Authorized Signatory
	Name: Authorized Signatory

BORROWERS: BLUEFLY, INC.
By:	/s/ Joseph Park
	Name: Joseph Park Title:   CEO

EVT ACQUISITION CO., LLC
By:	/s/ Kara Jenny
	Name: Kara Jenny Title:   CFO

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