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BFLY > SEC Filings for BFLY > Form 8-K on 19-Nov-2012All Recent SEC Filings

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Form 8-K for BLUEFLY INC


19-Nov-2012

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation


ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On November 13, 2012, the Company entered into a new three-year revolving credit facility ("Credit Facility") with Salus Capital Partners, LLC ("Salus") secured by all assets of the Company. The Credit Facility refinanced the Company's previous credit facility with Wells Fargo Retail Finance, LLC ("Wells Fargo").

Pursuant to the terms of the Credit Facility, Salus provides the Company with a revolving credit facility and facilitates the issuance of letters of credit in favor of suppliers or factors. Availability under the Credit Facility is determined by a formula that considers a specified percentage of the Company's accounts receivable and a specified percentage of the Company's inventory. The maximum availability is $10 million, of which up to $5 million is available for the issuance of letters of credit. Interest accrues under the Credit Facility at the prime rate plus 4.75%, subject to a minimum rate of 8.00%. Letters of credit issued by third parties are cash collateralized by amounts drawn under the Credit Facility. $4,700,000 was drawn under the Credit Facility at closing to cash collateralize letters of credit outstanding at such date. In addition, the Company paid an origination fee of $187,500 at closing, will pay a collateral monitoring fee of $3,000 per month and will pay unused commitment fees of 0.75%. A termination fee of $75,000 was paid at closing to Wells Fargo.

The terms of the Credit Facility contain a material adverse condition clause. This feature may limit the Company's ability to obtain additional borrowings or result in a default on current outstanding letters of credit.

In connection with the Credit Facility, the Company's promissory notes issued to Rho Ventures VI, L.P. ("Rho") and Prentice Consumer Partners, LP ("Prentice") were amended to reflect the subordination terms negotiated between Rho, Prentice and Salus ("the "Amended Notes").

The foregoing description of the Credit Facility and the Amended Notes is not intended to be complete and is qualified in its entirety by the complete text of such agreements, which are filed as Exhibits 10.1, 10.2 and 10.3 hereto and is incorporated herein by reference.



ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

The information called for by this item is contained in Item 1.01, which is incorporated herein by reference.



ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Exhibit No.   Description
10.1          Credit Agreement and related Security Agreement, each dated November
              13, 2012, by and among the Company, its subsidiary EVT Acquistion Co.,
              LLC and Salus Capital Partners, LLC.

10.2          Amendment No. 1 to Secured Subordinated Promissory Note, dated
              November 13, 2012, by and between the Company and Prentice Consumer
              Partners LP.

10.3          Amendment No. 1 to Secured Subordinated Convertible Promissory Note,
              dated November 13, 2012, by and between the Company and Rho Ventures
              VI, L.P.

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