

                                                             Page 67 of 79 pages


                                   EXHIBIT F

                            CERTIFICATE OF AMENDMENT
                                       OF
                        THE CERTIFICATE OF INCORPORATION
                                       OF
                                  BLUEFLY, INC.

   Under Section 805 of the Business Corporation Law of the State of New York

                  FIRST:  The name of the  corporation  is  Bluefly,  Inc.  (the
"Corporation").  The name  under  which  the  corporation  was  formed  is Pivot
Corporation.

                  SECOND: The  Certificate of  Incorporation  of the Corporation
was filed by the Secretary of State of New York on the 12th day of April,  1991.
A Restated  Certificate of  Incorporation  of the  Corporation  was filed by the
Secretary of State of the State of New York on the 15th day of May, 1997.

                  THIRD:  The  amendment  of the  Certificate  of  Incorporation
effected by this certificate of amendment is as follows:

                          To add a provision stating the designation, number and
relative rights, preferences,  privileges and restrictions of shares of Series A
of preferred  stock of the Corporation as fixed by the Board of Directors of the
Corporation  pursuant  to the  authorization  contained  in the  Certificate  of
Incorporation.

                  FOURTH: To accomplish the foregoing  amendment,  the following
new Article, relating to the designation, number and relative rights, privileges
and restrictions of the Series A Convertible  Preferred Stock is inserted in the
Certificate of Incorporation:

          A.      Pursuant to authority conferred upon the Board of Directors by
the  Certificate  of  Incorporation   of  the   Corporation,   as  amended  (the
"Certificate of Incorporation"),  said Board of Directors,  at a meeting held on
July 21, 1999, adopted  resolutions  providing for the designation,  preferences
and  relative,  participating,  optional  and  other  special  rights,  and  the
qualifications,  limitations  and  restrictions  of the  Corporation's  Series A
Convertible Preferred Stock, which resolutions are as follows:

                  WHEREAS,  the Certificate of Incorporation of this Corporation
provides  for two classes of shares  known as Common  Stock,  par value $.01 per
share, and Preferred Stock, par value $.01 per share; and

                  WHEREAS,  the  Board  of  Directors  of  this  Corporation  is
authorized by the  Certificate of  Incorporation  to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate pursuant to
the  applicable law of the State of New York, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof.

<PAGE>

                                                             Page 68 of 79 pages

                  NOW,  THEREFORE,  BE IT RESOLVED,  that the Board of Directors
deems it  advisable  to,  and  hereby  does,  designate  a Series A  Convertible
Preferred   Stock  and   fixes   and   determines   the   preferences,   rights,
qualifications,   limitations  and   restrictions   relating  to  the  Series  A
Convertible Preferred Stock as follows:

                  1.      Designation/Ranking.  The  shares  of such  series  of
                          -------------------
Preferred  Stock shall be designated as "Series A Convertible  Preferred  Stock"
(referred to herein as the "Series A Convertible Preferred Stock"). The Series A
Convertible  Preferred Stock shall rank senior to the Corporation's Common Stock
and all other Preferred Stock of the Corporation, with respect to the payment of
distributions  on liquidation,  dissolution or winding up of the Corporation and
with respect to the payment of dividends.

                  2.      Authorized Number.  The number of shares  constituting
                          -----------------
the Series A Convertible Preferred Stock shall be 500,000 shares.

                          a)         Dividends.   The   holders   of   Series  A
                                     ---------
Convertible  Preferred Stock shall be entitled to receive,  out of funds legally
available for such purpose,  dividends  which shall accrue at the rate of 8% per
annum and shall compound annually,  payable only upon: (i) the conversion of the
Series A Convertible Preferred Stock pursuant to Section 6; (ii) a redemption of
the Series A  Convertible  Preferred  Stock under  Section 7; or (iii) a merger,
consolidation or sale of substantially all of the Corporation's  assets in which
the per share  consideration  received by the Corporation or its shareholders is
less than three times the applicable  Conversion Price (as defined herein) (each
of such items listed in this clause (iii), a "Liquidation"). The Corporation, in
its sole discretion,  may elect to pay such dividends in shares of Common Stock,
in which case such Common Stock dividends shall be equal to the number of shares
of Common  Stock  obtained  by dividing  the cash value of such  dividend by the
Current Market Price (as defined in Section 6(e)(vi)) prior to such Liquidation.

                          b)         Dividends   on  each   share  of  Series  A
Convertible  Preferred  Stock shall be cumulative and shall accrue from the date
of issuance of such share of Series A Convertible  Preferred  Stock. The date on
which  the  Corporation  initially  issues  any  share of  Series A  Convertible
Preferred Stock shall be deemed to be its "Issue Date," regardless of the number
of times  transfer of such shares is made on the stock records  maintained by or
for the  Corporation  and regardless of the number of  certificates  that may be
issued to evidence such share.

                          c)         In   addition   to  the  right  to  receive
dividends  pursuant to Section  3(a)  above,  each holder of a share of Series A
Convertible  Preferred  Stock shall have the right,  at any time after the Issue
Date, if the Board of Directors of the  Corporation  shall declare a dividend or
make any other distribution  (including,  without  limitation,  in cash or other
property or assets, but excluding any stock split effected as a stock dividend),
to holders of shares of Common Stock, to receive, out of funds legally available
therefor,  a dividend or  distribution  in an amount equal to the amount of such
dividend  or  distribution  receivable  by a holder  of the  number of shares of
Common Stock into which such share of Series A  Convertible  Preferred  Stock is
convertible  on the record  date for such  dividend  or  distribution.  Any such
amount shall be paid to the holders of shares of Series A Convertible  Preferred
Stock at the same time such dividend or  distribution  is made to the holders of
Common Stock.

<PAGE>

                                                             Page 69 of 79 pages

                  3.      Liquidation.
                          -----------

                          a)         Upon  any   Liquidation,   dissolution   or
winding up of the Corporation,  whether voluntary or involuntary, the holders of
the shares of Series A  Convertible  Preferred  Stock shall be paid,  before any
distribution  or payment is made upon any stock  ranking  junior to the Series A
Convertible Preferred Stock, an amount equal to the greater of (i) $20 per share
plus, in the case of each share,  an amount equal to any dividends  declared but
unpaid thereon,  through the date payment thereof is made available ("Redemption
                                                                      ----------
Payment"),  and (ii) the amount  that the  holders  of the Series A  Convertible
-------
Preferred  Stock  would  receive if they were to convert  each share of Series A
Convertible  Preferred  Stock into shares of Common Stock  immediately  prior to
such Liquidation, dissolution or winding up. The holders of Series A Convertible
Preferred  Stock  shall not be  entitled to any  further  payment  (such  amount
payable with respect to one share of Series A Convertible  Preferred Stock being
sometimes  referred  to as the  "Liquidation  Payment"  and with  respect to all
                                 --------------------
shares of Series A Convertible  Preferred Stock being  sometimes  referred to as
the "Liquidation Payments").
     --------------------

                          b)         If upon such  Liquidation,  dissolution  or
winding up of the Corporation,  whether voluntary or involuntary,  the assets to
be distributed  among the holders of Series A Convertible  Preferred Stock shall
be  insufficient  to permit  payment  to the  holders  of  Series A  Convertible
Preferred  Stock of the  Liquidation  Payments,  then the  entire  assets of the
Corporation to be so distributed shall be distributed  ratably among the holders
of Series A Convertible Preferred Stock. Upon any such Liquidation,  dissolution
or  winding up of the  Corporation,  after the  holders of Series A  Convertible
Preferred Stock shall have been paid in full the  Liquidation  Payments to which
they  shall be  entitled,  the Series A  Convertible  Preferred  Stock  shall be
automatically  canceled and the remaining net assets of the  Corporation  may be
distributed  to the  holders  of  securities  ranking  junior  to the  Series  A
Convertible Preferred Stock on Liquidation.

                          c)         Written   notice   of   such   Liquidation,
dissolution or winding up, stating a payment date, the amount of the Liquidation
Payments and the place where said Liquidation  Payments shall be payable,  shall
be delivered in person,  mailed by certified or registered mail,  return receipt
requested,  or sent by telecopier  or telex,  not less than 10 days prior to the
payment date stated  therein,  to the holders of record of Series A  Convertible
Preferred Stock,  such notice to be addressed to each such holder at its address
as shown by the records of the Corporation.

                          d)         The Series A  Convertible  Preferred  Stock
shall,  with respect to distribution of assets and rights upon the  Liquidation,
dissolution  or  winding  up of the  Corporation,  rank  senior to each class or
series of capital  stock of the  Corporation  hereafter  created  which does not
expressly  provide  that it ranks on a parity  with or is senior to the Series A
Convertible  Preferred  Stock with respect to  distribution of assets and rights
upon the Liquidation, dissolution or winding up of the Corporation.

                  4.      Voting Rights.
                          -------------

                          a)         In addition  to any other vote  required by
law or the Corporation's Certificate of Incorporation,  the Corporation may take

<PAGE>

                                                             Page 70 of 79 pages

the  following  actions only with the  approval of a majority of the  directors,
which must include the Class A Director  (as defined  herein) to the extent that
the holders of the Series A Convertible  Preferred Stock are entitled to appoint
a Class A Director  under the terms hereof,  (i) at any time when the Purchasers
(as defined in the Investment Agreement (the "Agreement"),  dated as of July 27,
1999, by and among the Corporation, and the Purchasers set forth therein) retain
through  beneficial  ownership  at  least  50% of the  shares  of the  Series  A
Convertible  Preferred Stock  purchased under the Agreement,  on an as-converted
basis: a liquidation; a repurchase or redemption of equity securities or debt in
excess of $10,000  (except to the extent such debt is due in accordance with its
terms); the authorization or issuance of any equity securities senior to or pari
passu  with the Series A  Convertible  Preferred  Stock;  the  authorization  or
issuance of any additional  shares of Series A Convertible  Preferred Stock; and
any amendment to any Transaction  Document (as defined in the Agreement) or (ii)
at any time when the Purchasers  retain through  beneficial  ownership shares of
capital  stock  representing,  on an  as-converted  basis,  at least 7.5% of the
outstanding shares of Common Stock on a fully diluted basis (after giving effect
to all outstanding  options and warrants and other convertible  securities),  an
acquisition by the Corporation of another  business entity for  consideration in
excess  of  an  amount  equal  to  30%  of  the  market  capitalization  of  the
Corporation;  the incurrence of indebtedness  in any year, in the aggregate,  in
excess  of  an  amount  equal  to  30%  of  the  market  capitalization  of  the
Corporation;  liens on, or  encumbrances  of, assets with a fair market value in
excess  of  an  amount  equal  to  10%  of  the  market  capitalization  of  the
Corporation; and any transaction with an Affiliate (as defined in the Agreement)
other  than  a  transaction  approved  by  the  Compensation  Committee  of  the
Corporation. For purposes of the preceding sentence, market capitalization shall
be determined by multiplying  the total shares of publicly  traded capital stock
by the Current Market Price.

                          b)         Holders of Series A  Convertible  Preferred
Stock  shall be  entitled  to notice  of any  shareholders'  meeting.  Except as
otherwise required by law, at any annual or special meeting of the Corporation's
stockholders,  or in  connection  with any  written  consent in lieu of any such
meeting, each outstanding share of Series A Convertible Preferred Stock shall be
entitled  to the number of votes  equal to the  number of full  shares of Common
Stock  into which such  share of Series A  Convertible  Preferred  Stock is then
convertible (calculated by rounding any fractional share up to the nearest whole
number) on the date for  determination  of stockholders  entitled to vote at the
meeting.  Except as set forth herein or otherwise  required by law, the Series A
Convertible Preferred Stock and the Common Stock shall vote together as a single
class on each matter submitted to the stockholders, and not by separate class or
series.

                          c)         For  so  long  as the  Purchasers  maintain
through  beneficial  ownership  at  least  50% of the  shares  of the  Series  A
Convertible  Preferred Stock, the holders of the Series A Convertible  Preferred
Stock, voting separately as a class, shall be entitled to elect one (1) director
to the Board of Directors (the "Class A Director")  upon a vote of a majority of
the  outstanding  Series  A  Convertible  Preferred  Stock.  A  vacancy  in  any
directorship elected by the holders of the Series A Convertible  Preferred Stock
shall be filled  only by vote or  written  consent  in lieu of a meeting  of the
holders  of the  Series A  Convertible  Preferred  Stock.  Except  as  otherwise
required by applicable law, any member of the Board of Directors  elected by the
holders of the Series A Convertible  Preferred  Stock may only be removed by the
vote of the  holders  of not less than a majority  of the  Series A  Convertible
Preferred Stock voting thereon.

<PAGE>

                                                             Page 71 of 79 pages

                          d)         Notwithstanding  anything set forth herein,
with the exception of any action duly approved by the Class A Director  pursuant
to  Section  5(a)  above,  at any time when any  shares of Series A  Convertible
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater  number of shares of the  Corporation is required by law or
by the Corporation's Certificate of Incorporation,  and in addition to any other
vote required by law or the Corporation's Certificate of Incorporation,  without
the  approval  of the  holders  of at  least  two-thirds  (66  2/3%) of the then
outstanding shares of Series A Convertible  Preferred Stock, given in writing or
by vote at a meeting,  consenting or voting (as the case may be) separately as a
series,  the  Corporation  will not effect any  transaction or other action that
would  adversely  affect the rights,  preferences,  powers  (including,  without
limitation,  voting powers) and privileges of the Series A Convertible Preferred
Stock.

                  5.      Conversions.   The  holders  of  shares  of  Series  A
                          -----------
Convertible Preferred Stock shall have the following conversion rights:

                          a)         Right to Convert.  Subject to the terms and
                                     ----------------
conditions  of this  paragraph  6, the holder of any share or shares of Series A
Convertible  Preferred Stock shall have the right, at its option at any time, to
convert any such shares (or fractions thereof) of Series A Convertible Preferred
Stock  (except  that upon any  Liquidation,  dissolution  or  winding  up of the
Corporation the right of conversion  shall terminate at the close of business on
the business day immediately  preceding the date fixed for payment of the amount
distributable  on the Series A Convertible  Preferred Stock) into such number of
fully  paid and  nonassessable  shares of  Common  Stock as is  obtained  by (i)
multiplying  the number of shares of Series A Convertible  Preferred Stock to be
so converted  by $20 and (ii)  dividing  the result by the  conversion  price of
$10.50  per share  or,  in case an  adjustment  of such  price  has taken  place
pursuant to the further  provisions of this  paragraph 6, then by the conversion
price as last adjusted and in effect at the date any share or shares of Series A
Convertible  Preferred Stock are surrendered for conversion (such price, or such
price as last  adjusted,  being  referred to as the  "Conversion  Price").  Such
                                                      -----------------
rights of conversion  shall be exercised by the holder thereof by giving written
notice that the holder  elects to convert a stated  number of shares of Series A
Convertible  Preferred Stock into Common Stock and by surrender of a certificate
or  certificates  for the shares to be so  converted to the  Corporation  at its
principal  office  (or such  other  office or agency of the  Corporation  as the
Corporation  may  designate  by notice in writing to the holders of the Series A
Convertible  Preferred Stock) at any time during its usual business hours on the
date set forth in such  notice,  together  with a statement of the name or names
(with  address) in which the  certificate or  certificates  for shares of Common
Stock shall be issued.

                          b)         Automatic Conversion.  Upon the earlier of:
                                     --------------------
(i) the date on which the last sale price of the  Common  Stock on NASDAQ or, if
not quoted on NASDAQ,  on any other  national  securities  exchange  has been at
least 3 times the  Conversion  Price for 30  consecutive  trading days, and (ii)
immediately  prior to the closing of a merger,  sale of all or substantially all
of the Corporation's assets, or any combination thereof in which the Corporation
or its  shareholders  are to  receive  cash  or  marketable  securities  with an
aggregate value of at least 3 times the Conversion Price, each outstanding share
of Series A Convertible  Preferred  Stock shall  automatically,  with no further
action  required  to be taken  by the  Corporation  or the  holder  thereof,  be

<PAGE>

                                                             Page 72 of 79 pages

converted  into such  number of fully  paid and  nonassessable  shares of Common
Stock as is obtained by dividing $20 by the Conversion Price then in effect.  If
on any such date the  shares of Common  Stock  are not  listed or  admitted  for
trading on any  national  securities  exchange  or quoted by NASDAQ or a similar
service,  the Current Market Price for the Common Stock shall be the fair market
value of the Common Stock on such date as  determined in good faith by the Board
of Directors of the Corporation. Immediately thereafter, each holder of Series A
Convertible  Preferred  Stock  shall be deemed to be the holder of record of the
Common Stock  issuable upon  conversion  of such  holder's  Series A Convertible
Preferred Stock notwithstanding that the share register of the Corporation shall
then be closed or that  certificates  representing  such Common  Stock shall not
then be actually  delivered  to such person.  Upon notice from the  Corporation,
each holder of Series A Convertible  Preferred Stock so converted shall promptly
surrender to the Corporation,  at any place where the Corporation shall maintain
a transfer agent for its Series A Convertible  Preferred Stock and Common Stock,
certificates  representing  the shares so  converted,  duly endorsed in blank or
accompanied  by proper  instruments  of transfer.  On the date of such automatic
conversion,  all  rights  with  respect  to the  shares of Series A  Convertible
Preferred Stock so converted,  including the rights,  if any, to receive notices
and to vote,  will  terminate,  except only the rights of holders thereof to (i)
receive  certificates  for the number of shares of Common  Stock into which such
shares of Series A Convertible  Preferred  Stock have been  converted,  (ii) the
payment of any accrued but unpaid dividends thereon as provided herein and (iii)
exercise the rights to which they are entitled as holders of Common Stock.

                          c)         Issuance of  Certificates;  Time Conversion
                                     -------------------------------------------
Effected.  Promptly after the surrender of the certificate or  certificates  for
--------
the shares of Series A Convertible  Preferred Stock to be converted as set forth
above,  the  Corporation  shall  issue and  deliver,  or cause to be issued  and
delivered, to the holders,  registered in such name or names as such holders may
direct,  a certificate or certificates  for the number of whole shares of Common
Stock  issuable  upon the  conversion  of such  shares of  Series A  Convertible
Preferred Stock.

                          d)         Fractional Shares;  Partial Conversion.  No
                                     --------------------------------------
fractional  shares of Common Stock shall be issued upon  conversion  of Series A
Convertible Preferred Stock into Common Stock and no payment or adjustment shall
be made upon any conversion on account of any cash dividends on the Common Stock
issued upon such  conversion.  If any  fractional  share of Common  Stock would,
except for the  provisions of the first sentence of this  Subparagraph  6(d), be
delivered upon such  conversion,  the  Corporation,  in lieu of delivering  such
fractional share, shall pay to the holder  surrendering the Series A Convertible
Preferred  Stock for  conversion  an amount in cash equal to the current  market
price of such  fractional  share as  determined  in good  faith by the  Board of
Directors of the Corporation.

                          e)         Antidilution  Adjustments.  The  applicable
                                     -------------------------
Conversion Price in respect of the Series A Convertible Preferred Stock shall be
subject to  adjustment  as follows if any of the events listed below occur prior
to the conversion of the Series A Convertible Preferred Stock into Common Stock.

                                     (1) In case the Corporation shall (x) pay a
dividend  or make a  distribution  on its  Common  Stock in shares of its Common
Stock,  (y) subdivide or reclassify its outstanding  Common Stock into a greater
number of shares, or (z) combine or reclassify its outstanding Common Stock into
a  smaller  number  of  shares,  the  applicable   Conversion  Price  in  effect
immediately  prior to such  event  shall be  adjusted  so that the holder of any

<PAGE>

                                                             Page 73 of 79 pages

share of the Series A Convertible  Preferred  Stock  thereafter  surrendered for
conversion  shall be entitled  to receive  the number of shares of Common  Stock
which it would have owned or have been  entitled to receive  after the happening
of such event had the share of such Series A  Convertible  Preferred  Stock been
converted  immediately  prior to the happening of such event. An adjustment made
pursuant to this paragraph shall become effective  immediately  after the record
date in the case of a dividend or distribution and shall become effective on the
effective date in the case of subdivision,  combination or reclassification.  If
any dividend or  distribution  is not paid or made,  the  applicable  Conversion
Price then in effect shall be appropriately readjusted.

                                     (2) In case the Corporation  shall (x) sell
or issue shares of its Common Stock,  (y) issue  rights,  options or warrants to
subscribe  for or  purchase  shares of Common  Stock or (z) issue or sell  other
rights for the purchase of shares of Common Stock or securities convertible into
or  exchangeable  into shares of Common Stock, in the case of one or more of the
events  described  in  the  immediately  preceding  clauses  (x),  (y)  and  (z)
(excluding  those  issuances  referred  to  in  Subparagraph   6(e)(iii)  below)
(collectively,  the "Securities"), at a price per share less than the Conversion
                     ----------
Price on the date the Corporation  fixes the offering price of such  Securities,
then in each such case the  applicable  Conversion  Price in effect  immediately
prior to the  issuance  of such  Securities  shall be  adjusted so that it shall
equal the price  determined by multiplying  the applicable  Conversion  Price in
effect immediately prior to the date of issuance of the Securities by a fraction
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of the Securities plus the number of shares of
Common Stock which the aggregate  consideration received for the issuance of the
Securities  would purchase at the Conversion  Price (as defined below),  and the
denominator  of which shall be the number of shares of Common Stock  outstanding
immediately  after the issuance of the  Securities  (after  giving effect to the
full exercise,  conversion or exchange, as applicable, of such Securities).  The
adjustment provided for in this Subparagraph 6(e)(ii) shall be made successively
whenever  any  Securities  are  issued  (provided,   however,  that  no  further
adjustments in the applicable Conversion Price shall be made upon the subsequent
exercise,  conversion or exchange,  as applicable of such Securities pursuant to
the original terms of such  Securities) and shall become  effective  immediately
after such issuance.  In determining  whether any Securities entitle the holders
of the Common Stock to subscribe for or purchase  shares of Common Stock at less
than  the  Current  Market  Price or the  applicable  Conversion  Price,  and in
determining  the  aggregate  offering  price of the  shares of  Common  Stock so
offered,  there shall be taken into  account any  consideration  received by the
Corporation for such Securities,  any consideration required to be paid upon the
exercise,  conversion or exchange,  as  applicable,  of such  Securities and the
value of all such  consideration (if other than cash) shall be determined by the
Board  of  Directors  (whose  determination,  if made in good  faith,  shall  be
conclusive).  If any or all of such  Securities  are not so  issued or expire or
terminate without having been exercised,  converted or exchanged, the applicable
Conversion  Price  then in  effect  shall  be  appropriately  readjusted  to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance  of such  Securities  been made  upon the  basis of only the  number of
shares of Common Stock  delivered  pursuant to  Securities  actually  exercised,
converted or exchanged.  For purposes of this Subparagraph  6(e)(ii), the number
of shares of Common Stock at any time outstanding  shall not include shares held
in the treasury of the Corporation or by any subsidiary of the Corporation.

<PAGE>
                                                             Page 74 of 79 pages


                                     (3) In  case  the  Corporation  shall  pay,
issue or  distribute to its holders of capital stock any shares of capital stock
of the  Corporation  or  evidences  of  indebtedness  or  cash or  other  assets
(excluding  (w) regular cash  dividends  payable out of earnings in the ordinary
course and distributed ratably to the holders of Series A Convertible  Preferred
Stock,  (x)  distributions  paid from retained  earnings of the  Corporation and
distributed ratably to the holders of Series A Convertible  Preferred Stock, (y)
dividends or  distributions  referred to in  Subparagraph  6(e)(i) above and (z)
dividends  or  distributions  paid or made to  holders  of  shares  of  Series A
Convertible  Preferred  Stock in the  manner  provided  in  Section  3 above) or
rights,  options or warrants to subscribe for or purchase any of its  securities
then, in each such case,  the applicable  Conversion  Price shall be adjusted so
that  it  shall  equal  the  price  determined  by  multiplying  the  applicable
Conversion Price in effect  immediately prior to the date of the distribution by
a fraction the numerator of which shall be the applicable  Conversion Price less
the then fair  market  value (as  determined  by the Board of  Directors,  whose
determination, if made in good faith, shall be conclusive) of the portion of the
capital stock, cash or assets or evidences of indebtedness so distributed, or of
the  subscription  rights,  options  or  warrants  so  distributed  or  of  such
convertible  or  exchangeable  securities,  with  respect to one share of Common
Stock, and the denominator of which shall be the applicable  Conversion Price in
effect immediately prior to the date of the distribution.  Such adjustment shall
be made  whenever any such  distribution  is made,  and shall  become  effective
retroactive to the record date for the determination of stockholders entitled to
receive such distribution. If any such distribution is not made or if any or all
of such  rights,  options or warrants  expire or terminate  without  having been
exercised, the applicable Conversion Price then in effect shall be appropriately
readjusted.

                                     (4)  Notwithstanding  the  foregoing,   the
provisions of this paragraph  shall not apply to the issuance of: (x) any equity
securities  issued  pursuant  to the  Corporation's  employee  option  or  stock
incentive  plan,  or (y) any  equity  securities  issued  as  consideration  for
services  provided  to the  Corporation  (in an  aggregate  amount not to exceed
75,000 shares of Common Stock in any fiscal year).

                                     (5)  Whenever  the  applicable   Conversion
Price is adjusted as herein provided,  the Corporation  shall promptly file with
the conversion agent (or, if there is no conversion  agent, the secretary of the
Corporation) an officer's  certificate setting forth such Conversion Price after
the  adjustment and setting forth a brief  statement of the facts  requiring the
adjustment, which certificate shall be conclusive evidence of the correctness of
the  adjustment.  Promptly after delivery of the  certificate,  the  Corporation
shall prepare a notice of the adjustment of such Conversion  Price setting forth
such Conversion Price and the date on which the adjustment becomes effective and
shall mail the notice of such  adjustment  of the  applicable  Conversion  Price
(together  with a copy of the  officer's  certificate  setting  forth  the facts
requiring  such  adjustment)  to the  holder  of  each  share  of the  Series  A
Convertible  Preferred Stock at such holder's last address as shown on the stock
books of the Corporation.

                                     (6)  For  the  purpose  of any  computation
under any provision  relating to the Series A Convertible  Preferred  Stock, the
"Current  Market Price" per share of Common Stock on any date shall be deemed to
 ---------------------
be the average of the daily closing  prices per share of Common Stock for the 30
consecutive  trading days  immediately  preceding such date. If on any such date
the  shares  of Common  Stock are not  listed or  admitted  for  trading  on any

<PAGE>

                                                             Page 75 of 79 pages

national  securities  exchange  or quoted by  NASDAQ or a similar  service,  the
Current  Market Price for the Common Stock shall be the fair market value of the
Common Stock on such date as  determined in good faith by the Board of Directors
of the Corporation.

                           f)      Reorganization,      Recapitalization      or
                                   ---------------------------------------------
Reclassification.   If   any   capital   reorganization,   recapitalization   or
----------------
reclassification of the capital stock of the Corporation (other than a merger or
consolidation  of the  Corporation  in which the  Corporation  is the  surviving
corporation  and  which  does not  result  in a  reclassification  or  change of
outstanding shares of Common Stock or a merger or consolidation  which is deemed
to be a Liquidation,  dissolution  or winding up of the  Corporation as provided
herein)  shall be effected in such a way that  holders of Common  Stock shall be
entitled to receive  stock,  securities  or assets  (other  than cash  dividends
payable out of  earnings or surplus in the  ordinary  course of  business)  with
respect to or in  exchange  for  Common  Stock,  then,  as a  condition  of such
reorganization,   recapitalization  or  reclassification,  lawful  and  adequate
provisions  shall be made  whereby  each holder of a share or shares of Series A
Convertible  Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the  terms and  conditions  specified  herein  and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series A  Convertible  Preferred  Stock,  such shares of
stock,  securities  or assets as may be issued or payable  with respect to or in
exchange  for a number of  outstanding  shares of such Common Stock equal to the
number of shares of such Common Stock  immediately  theretofore  receivable upon
such conversion had such reorganization or reclassification not taken place, and
in any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the  provisions  hereof  (including
without  limitation  provisions for  adjustments of the Conversion  Price) shall
thereafter  be  applicable,  as nearly as may be, in  relation  to any shares of
stock,  securities or assets  thereafter  deliverable  upon the exercise of such
conversion rights.

                           g)      Other Notice. In case at any time:
                                   ------------

                                   i.      the   Corporation  shall  declare any
                  dividend  upon its  Common  Stock  payable in cash or stock or
                  make any  other  distribution  to the  holders  of its  Common
                  Stock;

                                   ii.     the  Corporation  shall   offer   for
                  subscription  pro rata to the holders of its Common  Stock any
                  additional shares of stock of any class or other rights;

                                   iii.    there    shall    be   any    capital
                  reorganization or reclassification of the capital stock of the
                  Corporation,  or a consolidation  or merger of the Corporation
                  with or into  another  entity or entities,  or a sale,  lease,
                  abandonment,   transfer  or  other   disposition   of  all  or
                  substantially all its assets; or

                                   iv. there shall be a voluntary or involuntary
                  dissolution,  Liquidation  or winding  up of the  Corporation;
                  then, in any one or more of said cases, the Corporation  shall
                  give,  by delivery in person,  certified or  registered  mail,
                  return receipt  requested,  telecopier or telex,  addressed to
                  each  holder of any shares of Series A  Convertible  Preferred
                  Stock at the  address of such  holder as shown on the books of
                  the Corporation, (i) at least 10 days' prior written notice of
                  the date on which the books of the Corporation  shall close or
                  a record shall be taken for such

<PAGE>

                                                             Page 76 of 79 pages

                  dividend,   distribution   or   subscription   rights  or  for
                  determining   rights   to  vote  in   respect   of  any   such
                  reorganization,   reclassification,   consolidation,   merger,
                  disposition,  dissolution,  Liquidation or winding up and (ii)
                  in the  case  of any  such  reorganization,  reclassification,
                  consolidation,  merger, disposition,  dissolution, Liquidation
                  or winding up, at least 10 days' prior  written  notice of the
                  date when the same shall take place. Such notice in accordance
                  with the foregoing clause (i) shall also specify,  in the case
                  of any such dividend, distribution or subscription rights, the
                  date on which the  holders of Common  Stock  shall be entitled
                  thereto  and such  notice  in  accordance  with the  foregoing
                  clause  (ii) shall also  specify the date on which the holders
                  of Common  Stock shall be entitled  to exchange  their  Common
                  Stock for securities or other property  deliverable  upon such
                  reorganization,   reclassification,   consolidation,   merger,
                  disposition,  dissolution,  Liquidation  or winding up, as the
                  case may be.

                           h)      Stock to be Reserved. The Corporation will at
                                   --------------------
all times  reserve and keep  available  out of its  authorized  shares of Common
Stock,  solely  for the  purpose of  issuance  upon the  conversion  of Series A
Convertible Preferred Stock as herein provided,  such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding shares of
Series A Convertible  Preferred Stock. The Corporation covenants that all shares
of Common  Stock  which  shall be so issued  shall be duly  authorized,  validly
issued, fully paid and nonassessable by the Corporation and free from all taxes,
liens and charges with respect to the issue thereof,  and,  without limiting the
generality of the foregoing, the Corporation covenants that it will from time to
time take all such action as may be  requisite  to assure that the par value per
share of the Common  Stock is at all times equal to or less than the  Conversion
Price in effect at the time. The Corporation will take all such action as may be
necessary  to  assure  that all such  shares  of  Common  Stock may be so issued
without violation of any applicable law or regulation,  or of any requirement of
any national securities exchange or quotation system upon which the Common Stock
may be listed.  The  Corporation  will not take any action which  results in any
adjustment of the Conversion Price if the total number of shares of Common Stock
issued  and  issuable  after  such  action  upon  conversion  of  the  Series  A
Convertible  Preferred  Stock would  exceed the total number of shares of Common
Stock then authorized by the Corporation's Certificate of Incorporation.

                           i)      Reissuance  of  Preferred  Stock.  Shares  of
                                   --------------------------------
Series A Convertible Preferred Stock that have been issued and reacquired in any
manner, including shares purchased or redeemed or exchanged or converted,  shall
(upon compliance with any applicable  provisions of the Business Corporation Law
of the State of New York) have the status of authorized  but unissued  shares of
preferred  stock of the Company  undesignated as to series and may be designated
or  redesignated  and  issued  or  reissued,  as the case may be, as part of any
series  of  preferred  stock of the  Company  other  than  Series A  Convertible
Preferred Stock.

                           j)      Issue Tax. The issuance of  certificates  for
                                   ---------
shares of Common Stock upon  conversion of Series A Convertible  Preferred Stock
shall be made  without  charge to the holders  thereof for any  issuance  tax in

<PAGE>

                                                             Page 77 of 79 pages

respect thereof,  provided that the Corporation shall not be required to pay any
tax which 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  holder of the
Series A Convertible Preferred Stock which is being converted.

                           k)      Closing of Books.  The Corporation will at no
                                   ----------------
time close its transfer  books  against the transfer of any Series A Convertible
Preferred  Stock or of any shares of Common  Stock  issued or issuable  upon the
conversion of any shares of Series A Convertible  Preferred  Stock in any manner
which  interferes  with the  timely  conversion  of such  Series  A  Convertible
Preferred  Stock,  except as may otherwise be required to comply with applicable
securities laws.

                           l)      Minimum  Adjustment.   No  reduction  of  the
                                   -------------------
Conversion  Price shall be made if the amount of any such reduction  would be an
amount  less  than  $.10,  but any such  amount  shall be  carried  forward  and
reduction  with respect  thereof  shall be made at the time of and together with
any subsequent  reduction which,  together with such amount and any other amount
or amounts so carried forward, shall aggregate $.10 or more.

                  6.       Optional Redemption.  Upon a change in control of the
                           -------------------
Corporation  that will result in the holders of Series A  Convertible  Preferred
Stock  receiving cash or marketable  securities  with an aggregate value of less
than 3 times the Conversion  Price,  upon written notice to the Corporation (the
"Redemption  Notice"),  the holders of the Series A Convertible  Preferred Stock
shall have the right to require  the  Corporation  to redeem or  repurchase  the
shares  of Series A  Convertible  Preferred  Stock  for an  amount  equal to the
Redemption  Payment.  The Redemption  Notice shall state the number of shares of
Series A Convertible Preferred Stock that the holder intends to have redeemed.

                  7.       Future Issuance of Shares; Preemptive Rights.
                           --------------------------------------------

                           a)      Offering Notice. Except for (i) capital stock
                                   ---------------
or options to purchase  capital stock of the Corporation  which may be issued to
employees,  consultants  or  directors  of the  Corporation  pursuant to a stock
incentive plan or other employee  benefit  arrangement  approved by the Board of
Directors,  (ii) a subdivision of the outstanding  shares of Common Stock into a
larger number of shares of Common  Stock,  (iii) capital stock issued as full or
partial  consideration  for a  merger,  acquisition,  joint  venture,  strategic
alliance,  license agreement or other similar  non-financing  transaction,  (iv)
capital stock issued as full or partial  consideration  for services (v) capital
stock issued in connection  with a publicly  registered  offering,  (vi) capital
stock  issued upon  exercise,  conversion  or exchange of any  Preferred  Stock,
options or warrants,  or (vii) capital  stock  purchased by any Purchaser in the
public market or from the  Corporation,  if the Corporation  wishes to issue any
shares of capital stock or any other securities convertible into or exchangeable
for capital stock of the  Corporation  (collectively,  "New  Securities") to any
                                                        ---------------
Person (the "Subject Purchaser"), then the Corporation shall send written notice
             -----------------
(the "New Issuance Notice") to the holders of the Series A Convertible Preferred
      -------------------
Stock,  which New Issuance  Notice shall state (x) the number of New  Securities
proposed to be issued and (y) the proposed  purchase  price per share of the New
Securities that the Corporation is willing to accept (the "Proposed Price").
                                                           --------------

<PAGE>

                                                             Page 78 of 79 pages

                           b)      Preemptive Rights; Exercise.
                                   ---------------------------

                                   (1) For a period of ten (10)  days  after the
giving of the New  Issuance  Notice as provided in Section  8(a),  each  initial
holder of the Series A Convertible  Preferred Stock and any permitted  assignees
thereof  pursuant to Section  11.3 of that certain  Investment  Agreement by and
among the Corporation and certain  purchasers  listed therein,  dated as of July
27, 1999 (each, a "Preemptive  Rightholder") shall have the right to purchase up
to its Proportionate  Percentage (as hereinafter  defined) of the New Securities
at a  purchase  price  equal  to the  Proposed  Price  and upon  the  terms  and
conditions set forth in the New Issuance  Notice.  Each  Preemptive  Rightholder
shall have the right to purchase  up to that  percentage  of the New  Securities
determined  by  dividing  (a) a number  equal to the  number of shares of Common
Stock into which the shares of Series A Convertible  Preferred  Stock then owned
by such  Preemptive  Rightholder  are  convertible  by (b) the  total of (x) the
number of shares of Common Stock then  outstanding  and (y) the number of shares
of Common  Stock  into  which all  outstanding  shares  of  Preferred  Stock are
convertible (the "Proportionate Percentage").

                                   (2) The right of each Preemptive  Rightholder
to purchase the New Securities  under  subsection (i) above shall be exercisable
by delivering  written  notice of its exercise,  prior to the  expiration of the
10-day period  referred to in subsection (i) above,  to the  Corporation,  which
notice shall state the amount of New Securities that the Preemptive  Rightholder
elects to purchase as provided in Section  8(b)(i).  The failure of a Preemptive
Rightholder  to respond  within the 10-day period shall be deemed to be a waiver
of the Preemptive Rightholder's rights under Section 8(b)(i); provided that each
Preemptive  Rightholder  may waive its, his or her rights under Section  8(b)(i)
prior to the  expiration  of the 10-day period by giving  written  notice to the
Corporation.

                                    i.     If,  following the  expiration of the
                  10-day period referred to above, not all of the New Securities
                  have  been  subscribed  for by the  Subject  Purchasers,  each
                  Preemptive  Rightholder  shall have the option to reduce  that
                  number of New  Securities it has elected to purchase  pursuant
                  to Section 8(b)(i) by a proportionate amount.

                           c)       Closing.  The closing of the purchase of New
                                    -------
Securities  subscribed  for by the  Preemptive  Rightholders  under Section 8(b)
shall be held at the same time and place as the  closing  of the New  Securities
subscribed for by the Subject  Purchasers (the "Closing").  At the Closing,  the
Corporation shall deliver certificates representing the New Securities,  and the
New Securities  shall be issued free and clear of all liens and the  Corporation
shall so represent and warrant,  and further  represent and warrant that the New
Securities  shall be, upon  issuance  of the New  Securities  to the  Preemptive
Rightholders and after payment for the New Securities, duly authorized,  validly
issued,  fully paid and  nonassessable by the Corporation.  At the Closing,  the
Preemptive  Rightholders  purchasing the New Securities shall deliver payment in
full in immediately  available funds for the New Securities purchased by it, him
or her. At the Closing,  all of the parties to the transaction shall execute any
additional documents that are otherwise necessary or appropriate.

                           d)       Sale to Subject  Purchaser.  The Corporation
                                    --------------------------
may sell to the Subject Purchaser all of the New Securities not purchased by the
Preemptive Rightholders as provided in Section 8(b) on terms and conditions that
are no more  favorable to the Subject  Purchaser than those set forth in the New
Issuance Notice; provided, however, that the sale is bona fide and made pursuant

<PAGE>

                                                             Page 79 of 79 pages


to a contract entered into within four (4) months of the earlier to occur of (i)
the waiver by the  Preemptive  Rightholders  of their option to purchase the New
Securities  as provided in Section  8(b) and (ii) the  expiration  of the 10-day
period referred to in Section 8(b). If such sale is not consummated  within such
four (4) month period for any reason, then the restrictions provided for in this
Section  8  shall  again  become  effective,  and no  issuance  and  sale of New
Securities may be made thereafter by the Corporation  without again offering the
New  Securities in accordance  with this Section 8. The closing of any issue and
purchase  contemplated  by this Section 8(d) shall be held at the time and place
as the parties to the transaction may agree.

         B.  The  recitals  and  resolutions  contained  herein  have  not  been
modified, altered or amended and are presently in full force and effect.

             IN WITNESS  WHEREOF,  the undersigned has executed this Certificate
this 27th day of July 1999.

                                  BLUEFLY, INC.


                                  By:    _______________________
                                  Name:  _______________________
                                  Title: President
