

                                                             Page 66 of 82 Pages

THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"),  OR THE  SECURITIES  LAWS OF ANY STATE.  THE  SECURITIES 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.

                                  BLUEFLY, INC.

                             SENIOR CONVERTIBLE NOTE


$2,904,900
New York, New York                                                 June 28, 2000

               FOR VALUE RECEIVED,  the undersigned,  BLUEFLY,  INC., a New York
corporation  (the  "Payor" or the  "Company"),  promises  to pay to the order of
QUANTUM  INDUSTRIAL  PARTNERS LDC or its registered  assign (the  "Payee"),  the
principal  sum of TWO MILLION NINE HUNDRED FOUR  THOUSAND  NINE HUNDRED  DOLLARS
($2,904,900)  and  interest on the  outstanding  principal  balance as set forth
herein.

               1.   Securities Purchase Agreement.  This Senior Convertible Note
is the Senior  Convertible Note issued pursuant to the Note and Warrant Purchase
Agreement,  dated as of June 28,  2000,  among  the  Payor,  the  Payee  and SFM
Domestic  Investments LLC (the "Securities  Purchase  Agreement").  The Payee is
entitled to the benefits of (and subject to the obligations  expressly contained
in) this Senior  Convertible Note and the Securities  Purchase Agreement and may
enforce the  agreements of the Payor  contained  herein and therein and exercise
the remedies  provided for hereby and thereby or otherwise  available in respect
hereto and thereto.  Capitalized terms used herein without definition shall have
the meaning ascribed to such terms in the Securities Purchase Agreement.

               2.   Interest Rate; Payment.

                    (a)  The  outstanding   principal  balance  of  this  Senior
Convertible  Note shall bear  interest  at an annual rate equal to 8% 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 shall be
payable only upon  repayment of the principal on any Repayment  Date (as defined
below).

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                                                             Page 67 of 82 Pages

                    (b)  The  outstanding  balance of any amount owed under this
Senior  Convertible  Note which is not paid when due shall bear  interest at the
rate of 2% per  annum  (the  "Default  Interest")  above  the  rate  that  would
otherwise  be in effect  under this  Senior  Convertible  Note with the  Default
Interest  accruing,   from  and  including  such  due  date,  on  a  cumulative,
compounding basis.

                    (c)  The  outstanding  principal  and all accrued and unpaid
interest  shall be paid in full no later  than  January  2, 2002 (the  "Maturity
Date"),  unless repaid earlier pursuant to the provisions of Section 3 (the date
of any  payment  pursuant  to  Section  3 and the  Maturity  Date,  collectively
referred to as a "Repayment 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.

                  (3)      Prepayment.

                    (a)  Mandatory Prepayment.

                         (i)  Upon the  occurrence  of an Event of  Default  (as
defined in Section 5), the outstanding  principal of and all accrued interest on
this Senior Convertible 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.

                         (ii) The  Payee  shall,  at its sole  option,  have the
right to require the Payor to pay the  outstanding  principal of and all accrued
interest  on this  Senior  Convertible  Note upon the  occurrence  of any of the
following events: (1) Payor entering into an agreement to effectuate any sale or
other  disposition of all or substantially all of its assets, in one transaction
or in a series of  transactions,  (2) the Company  entering into an agreement to
effectuate any consolidation or merger into another entity, or (3) any sale of a
majority  of the  outstanding  equity of the  Company  (or any other  event that
constitutes a Change of Control of the Payor), in one transaction or in a series
of  transactions.  Immediately  upon the  occurrence of either of the events set
forth in clauses (1) or (2) above, or immediately upon obtaining  knowledge that
any person has entered into an agreement to  effectuate,  the event set forth in
clause  (3) above,  the Payor  shall  give  written  notice of such event to the
Payee.  Change of Control  means any Person or "group"  (within  the  meaning of
Section  13(d)(3)  of the  Exchange  Act)  other than a  Principal  Shareholder,
becoming the beneficial owner, 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 (the term  "beneficial  owner" shall be determined in accordance  with
Rule 13d-3 of the Exchange Act).

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                                                             Page 68 of 82 Pages


                         (iii)Any mandatory  prepayment  under this Section 3(a)
shall include payment of reasonable costs and expenses,  if any, associated with
such prepayment.

                    (b)       Optional  Prepayment.  The Payor may prepay all or
any portion of this Senior  Convertible  Note,  at any time, by paying an amount
equal to the outstanding  principal amount of this Senior  Convertible  Note, or
the portion of this Senior Convertible Note called for prepayment, together with
interest  accrued  and unpaid  thereon to the date of  prepayment  and any other
amounts  due under this  Senior  Convertible  Note and the  Securities  Purchase
Agreement, without penalty or premium.

               4.             Mandatory Conversion.

                    (a)  This Senior  Convertible Note plus interest accrued and
unpaid thereon shall be  automatically  converted  simultaneously  with the Next
Round  Financing  (the  "Triggering  Event')  into that number of fully paid and
non-assessable  Next Round Securities which is equal to the quotient obtained by
dividing the then outstanding  principal amount of this Senior  Convertible Note
plus interest  accrued and unpaid thereon to the date of conversion by the price
per Next Round Security paid in the Next Round Financing.

                    (b)  Promptly after the  Triggering  Event the Company shall
deliver or cause to be delivered to the holder of this Senior Convertible Note a
certificate  or  certificates   representing   the  number  of  fully  paid  and
non-assessable   shares  of  Next  Round   Securities  into  which  this  Senior
Convertible Note may be converted.  Such conversion shall be deemed to have been
made simultaneously with the conclusion of the Next Round Financing, so that the
rights of the holder as a holder of this  Senior  Convertible  Note shall  cease
with respect to this Senior  Convertible Note at such time  (including,  without
limitation,  the right to receive the principal of this Senior  Convertible Note
other than in the form of Next Round Securities), interest shall cease to accrue
hereon and the person or persons  entitled to receive the Next Round  Securities
deliverable upon conversion of this Senior Convertible Note shall be treated for
all purposes as having become the record  holders of such Next Round  Securities
at such time, and such  conversion  shall be at the conversion rate in effect at
such time.

                    (c)  The Company covenants that it will at all times reserve
and keep available out of its authorized Next Round  Securities (at such time as
such Securities are authorized) solely for the purpose of issue or delivery upon
conversion of this Senior  Convertible Note as herein  provided,  such number of
Next  Round  Securities  as  shall  then be  issuable  or  deliverable  upon the
conversion of this Senior  Convertible Note. The Company covenants that all Next
Round Securities which shall be so issuable or deliverable shall, when issued or
delivered, be duly and validly issued and fully paid and non-assessable.

                                       3
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                                                             Page 69 of 82 Pages


               5.             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 Senior  Convertible  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;

                    (b)  the Payor shall fail to observe or perform any covenant
or agreement  contained in this Senior Convertible Note, the Securities Purchase
Agreement or the Warrants and such failure shall continue for five 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 Senior  Convertible  Note or
the  Securities  Purchase  Agreement  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, (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;

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                                                             Page 70 of 82 Pages

                    (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 $50,000 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)  the Payor shall incur any  indebtedness  senior to this
Senior Convertible Note; or

                    (i)  any  material  provisions  of this  Senior  Convertible
Note,  the Securities  Purchase  Agreement,  or the Warrants shall  terminate or
become void or unenforceable or the Payor shall so assert in writing.

               6.             Senior Status. The indebtedness  evidenced by this
Senior  Convertible Note is senior in right of payment to all other indebtedness
of the Payor and Payor agrees not to incur any indebtedness,  which by its terms
is senior in right of payment to this Senior Convertible Note.

               7.             Suits for Enforcement.

                    (a)  Upon  the  occurrence  of any  one or  more  Events  of
Default,  the holder of this Senior  Convertible Note may proceed to protect and
enforce  its  rights by suit in  equity,  action at law or by other  appropriate
proceeding,  whether for the specific  performance  of any covenant or agreement
contained in the Securities  Purchase Agreement or in aid of the exercise of any
power  granted in this Senior  Convertible  Note,  or may proceed to enforce the
payment  of this  Senior  Convertible  Note,  or to enforce  any other  legal or
equitable right it may have as a holder of this Senior Convertible Note.

                    (b)  The holder of this Senior  Convertible  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  under the  Securities
Purchase Agreement,  the Payor will pay to the holder of this Senior Convertible
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.

               8.             Notices.   All   notices,    demands   and   other
communications  provided for or permitted  hereunder shall be made in the manner
and to the  addresses  set  forth in  Section  11.2 of the  Securities  Purchase
Agreement.

                                       5
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                                                             Page 71 of 82 Pages

               9.             Successors  and Assigns.  This Senior  Convertible
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 under this Senior  Convertible  Note without the prior written consent of
Payee.  The Payee may  assign all or a portion  of their  rights or  obligations
under this Senior  Convertible  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 Senior  Convertible  Note, any waiver of any provision of this
Senior  Convertible  Note and any consent to any departure by the Payor from the
terms of any provision of this Senior  Convertible  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 Senior Convertible
Note are for  convenience  of  reference  only and shall not limit or  otherwise
affect the meaning hereof.

               12.            GOVERNING LAW. THIS SENIOR  CONVERTIBLE 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 fees,  expenses,  disbursements
and other charges of Paul, Weiss, Rifkind,  Wharton & Garrison,  special 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  settlements  of this  Senior  Convertible  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  Senior  Convertible  Note  or any
instrument or document  delivered  pursuant to this Senior  Convertible Note, or
the validity, protection, interpretation,  collection or enforcement thereof, or
any other claim or dispute howsoever  arising,  between any 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.

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                                                             Page 72 of 82 Pages

               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 Senior  Convertible
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 Senior  Convertible Note,
the Warrants and the Securities Purchase Agreement 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 Senior  Convertible 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 Senior Convertible Note.

                                        BLUEFLY, INC.

                                        By:     /S/ KEN SEIFS
                                                -------------------------------
                                                Name:   Ken Seifs
                                                Title:  Cheif Executive Officer

