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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
AUGUST 12, 2008
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BLUE HOLDINGS, INC.
(Exact name of registrant as specified in charter)
NEVADA
(State or other Jurisdiction of Incorporation or Organization)
000-33297 88-0450923
(Commission File Number) (IRS Employer Identification No.)
4901 ZAMBRANO STREET
COMMERCE, CA 90040
(Address of Principal Executive
Offices and zip code)
(323) 726-1913
(Registrant's telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act
(17 CFR 240.14a-12(b))
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION
UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On July 30, 2008, the Registrant entered into an Amendment Agreement
("Amendment Agreement") to the Securities Purchase Agreement dated March 5, 2008
(the "Securities Purchase Agreement") with Gemini Master Fund, Ltd. (the
"Investor"). The Registrant previously issued a thirty-month senior secured
convertible note in the principal amount of $2,000,000 (the "Existing Note"),
and a five-year warrant to purchase an aggregate of 875,000 shares of the
Registrant's common stock (the "Existing Warrant") under the Securities Purchase
Agreement. Under the terms of the Amendment Agreement, the Registrant and the
Investor agreed, in exchange for the Investor's waiver of certain breaches under
the Existing Note, to exchange the Existing Note for an amended and restated 8%
senior secured convertible note ("Amended and Restated Note"), and to exchange
the Existing Warrant for an amended and restated warrant ("Amended and Restated
Warrant"). The transactions contemplated by the Amendment Agreement closed on
August 12, 2008.
The Amended and Restated Note has an aggregate principal amount of
$2,500,000 and a term of approximately thirty months commencing from March 5,
2008. The Amended and Restated Note carries interest at 8% per annum on the
unpaid/unconverted principal balance, and is secured on a second priority basis
against all of the assets of the Registrant. One-twenty-fourth of the principal
amount of the Amended and Restated Note, and accrued but unpaid interest, are
due and payable monthly in 24 installments beginning on October 1, 2008. These
installment payments can be made in cash or through the issuance of stock
provided that certain equity conditions (as further set forth in the Amended and
Restated Note) are met. The Amended and Restated Note is convertible, at the
option of the Investor prior to its maturity, into approximately 6,250,000
shares of the Registrant's common stock (subject to adjustment as provided in
the Amended and Restated Note, including pursuant to economic anti-dilution
adjustments), based on a conversion price equal to $0.40 per share.
Additionally, beginning March 5, 2009, the Registrant can require the Investor
to convert the Amended and Restated Note into shares of the Registrant's common
stock if the volume-weighted average price (as determined pursuant to the
Amended and Restated Note) of the common stock for any 20 out of 30 consecutive
trading days exceeds $0.80 and certain equity conditions (as further set forth
in the Amended and Restated Note) are met.
The Amended and Restated Warrant has a term of five years commencing
from March 5, 2008 and entitles the Investor to initially purchase an aggregate
of 2,187,500 shares of the Registrant's common stock (subject to adjustment as
provided in the Amended and Restated Warrant, including pursuant to economic
anti-dilution adjustments) at an exercise price of $0.40 per share.
The Amended and Restated Note and the Amended and Restated Warrant
provide that if the Registrant has not obtained shareholder approval, the
Registrant may not issue, upon conversion or exercise of the Amended and
Restated Note and the Amended and Restated Warrant, as applicable, a number of
shares of the Registrant's common stock which, when aggregated with any shares
of the Registrant's common stock issued on or after March 5, 2008 and prior to
expiration of the Amended and Restated Warrant and the maturity of the Amended
and Restated Note (A) in connection with the conversion of the Amended and
Restated Note or as payment of principal, interest or liquidated damages, (B) in
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connection with the exercise of the Amended and Restated Warrant, and (C) in
connection with any warrants issued to any registered broker-dealer as a fee in
connection with the issuance of the securities pursuant to the Securities
Purchase Agreement, would exceed 19.99% of the number of shares of the
Registrant's common stock outstanding on March 4, 2008.
On July 30, 2008, the Registrant obtained the written consent of
holders of a majority of the outstanding shares of the Registrant's capital
stock to the transactions contemplated under the Amendment Agreement and intends
to file an information statement to effectuate the actions approved therein in
the immediate future.
The Amended and Restated Note and the Amended and Restated Warrant also
reduced to $0.30 the minimum trading price for the Registrant's common stock in
connection with revisions to one of the equity conditions included therein.
Except for the provisions described above, the terms of the Amended and Restated
Note and Amended and Restated Warrant are the same as those of the Existing Note
and Existing Warrant, respectively.
Also in connection with the Amendment Agreement, the Registrant and its
previously engaged placement agent agreed, in exchange for the placement agent's
waiver of certain breaches under the original note in the principal amount of
$86,400 issued to the placement agent (the "Agent Note"), to exchange the Agent
Note for an amended and restated 8% senior convertible note in the principal
amount of $108,000 (convertible into 270,000 shares of the Registrant's common
stock at a per share price of $0.40) with terms substantially similar to the
Amended and Restated Note (other than the grant of a security interest) (the
"Amended and Restated Agent Note"), and to exchange the warrant to purchase
150,000 shares of the Registrant's common stock originally issued to the
placement agent, for a new warrant to purchase 244,500 shares of the
Registrant's common stock, with terms substantially similar to the Amended and
Restated Warrant (the "Amended and Restated Agent Warrant").
The issuance of the Amended and Restated Note, the Amended and Restated
Warrant, the Amended and Restated Agent Note and the Amended and Restated Agent
Warrant is intended to be exempt from registration under the Securities Act
pursuant to Section 3(a)(9) thereof, as such securities were exchanged by the
Registrant with existing security holders exclusively and no commission or other
remuneration was paid or given directly or indirectly for soliciting such
exchange. No registration statement covering these securities has been filed
with the SEC or with any state securities commission in respect of the
transactions contemplated by the Amendment Agreement.
The transaction documents, including the Amendment Agreement and forms
of Amended and Restated Note and Amended and Restated Warrant, were attached to
the Registrant's Current Report on Form 8-K (File No. 000-33297), filed with the
Securities and Exchange Commission on August 4, 2008, as Exhibits 10.1, 10.2 and
10.3, respectively, and are incorporated herein by reference.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
10.1 Amendment Agreement dated July 30, 2008, by and
between the Registrant and the parties signatory
thereto. (1)
10.2 Form of Amended and Restated 8% Senior Secured
Promissory Note. (1)
10.3 Form of Amended and Restated Warrant. (1)
(1) Filed as an exhibit to the Registrant's Current Report on Form 8-K
(File No. 000-33297) filed with the Securities and Exchange Commission
on August 4, 2008.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Blue Holdings, Inc. has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BLUE HOLDINGS, INC.
Date: August 18, 2008 By: /S/ ERIC HOHL
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Eric Hohl, Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
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10.1 Amendment Agreement dated July 30, 2008, by and between the
Registrant and the parties signatory thereto. (1)
10.2 Form of Amended and Restated 8% Senior Secured Promissory Note.
(1)
10.3 Form of Amended and Restated Warrant. (1)
(1) Filed as an exhibit to the Registrant's Current Report on Form 8-K
(File No. 000-33297) filed with the Securities and Exchange Commission
on August 4, 2008.
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