COMMON STOCK PURCHASE AGREEMENT
Exhibit
10.8
THIS
COMMON STOCK PURCHASE AGREEMENT (this “Agreement”),
is made as of March 5, 2008 (the “Effective
Date”), by and among Blue Holdings, Inc., a Nevada corporation, (the
“Company”),
and each of the undersigned investors listed on the Schedule of Investors
attached hereto as Exhibit A
(individually, an “Investor,”
and collectively, the “Investors”).
WHEREAS, the Company desires
to enter into that certain Securities Purchase Agreement dated as of the date
hereof (the “Purchase
Agreement”), pursuant to which the Company will offer and sell to Gemini
Master Fund, Ltd. (or its affiliated entities) and certain additional purchasers
(each a “Purchaser”
and collectively “Purchasers”),
8% Senior Secured Convertible Notes (the “Notes”),
with a maximum aggregate principal amount of up to Three Million Dollars
($3,000,000), and certain Warrants (“Warrants”)
to purchase a number of shares of the Company’s common stock, par value $0.001
per share (“Common
Stock”), equal to 35% of the number of shares of Common Stock into which
the Notes are convertible;
WHEREAS, as a condition to the
closing of the transactions contemplated by the Purchase Agreement, the
Purchasers have requested that the Company issue and sell to the Investors up to
an aggregate of ____________ shares of Common Stock (the “Common
Shares”), in exchange for the cancellation of certain indebtedness due
and owing to the Investors on and as of the Effective Date; and
WHEREAS, the Investors,
severally and not jointly, wish to purchase the Common Shares on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in
consideration of the premises, representations, warranties and the mutual
covenants contained in this Agreement, the parties agree as
follows:
|
1.
|
AUTHORIZATION AND SALE
OF COMMON SHARES
|
1.1 Issuance,
Sale and Delivery of the Common Shares at the Closing. At the
Closing (as defined in Section 1.2 hereof), on the terms and subject to the
conditions of this Agreement, the Company shall issue and sell to each Investor,
and each Investor shall, severally and not jointly, purchase from the Company,
that number of Common Shares set forth opposite the name of such Investor under
the heading “Number of Common Shares to be Purchased” on Exhibit A hereto, at
a price of $0.80 per share (the “Price Per
Share”) for the aggregate purchase price set forth opposite the name of
such Investor under the heading “Aggregate Purchase Price for Common Shares” on
Exhibit A
hereto. For the avoidance of doubt, the Price Per Share represents
the greater of (i) $0.80, and (ii) the consolidated closing bid price of a share
of the Common Stock, as quoted on the NASDAQ Capital Market, on the Closing Date
(as defined below).
1.2 Closing. The
Closing shall take place at the offices of Xxxxxx Xxxxxxxx & Markiles, LLP,
00000 Xxxxxxx Xxxx., 00xx Xxxxx,
Xxxxxxx Xxxx, Xxxxxxxxxx 00000, at 4:00 p.m. Pacific Time, on March 5, 2008, or
such other date and time as may be agreed upon between the Company and the
Investors (such closing being called the “Closing” and such date and time
being called the “Closing
Date”). As payment in full for the Common Shares being
purchased by it under this Agreement on the Closing Date, each Investor shall
deliver to the Company by such method as may be reasonably acceptable to the
Company a promissory note or other evidence of indebtedness for cancellation, as
applicable, in the amount and as set forth opposite the name of such Investor
under the heading “Aggregate Purchase Price for Common Shares” on Exhibit A. All
amounts shall be paid to the account of the Company as shall have been
designated in writing a reasonable time in advance to the Investors by the
Company.
1.3 Issuance
and Delivery of the Common Shares at the Closing. On or before the
date that is one (1) business day following the Closing Date, the Company shall
deliver to the NASDAQ Stock Market any and all required notification forms,
including, without limitation, the Notification Form: Listing of Additional
Shares, so as to comply with the stock issuance notification requirements of the
NASDAQ Stock Market. On or before the date that is fifteen (15)
calendar days following the Closing Date, the Company shall issue and deliver to
each Investor a stock certificate or certificates in definitive form, registered
in the name of such Investor, representing the Common Shares purchased at the
Closing.
|
2.
|
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
|
2.1 Organization
and Standing; Qualifications. The Company is a
corporation validly existing and in good standing under the laws of the State of
Nevada. The Company has all requisite power and authority to own and
operate its properties and assets, and to carry on its business as conducted and
as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify could, singly or in the aggregate, have a material adverse
effect on the business, assets, liabilities, financial condition or results of
operations of the Company as presently conducted or proposed to be
conducted.
2.2 Corporate
Power. The
Company has all requisite power and authority to execute and deliver this
Agreement, to sell and issue the Common Shares hereunder, and to carry out and
perform its obligations under the terms of this Agreement.
2.3 Authorization.
2.3.1 All
corporate action on the part of the Company, its officers, directors and
stockholders, necessary for (i) the authorization, execution and delivery of the
Agreement by the Company, (ii) the authorization, sale, issuance and delivery of
the Common Shares, and (iii) the performance of all of the Company’s obligations
under the Agreement, has been taken, or shall be taken on or before the date
that the Common Shares are issued. The Agreement has been duly and
validly executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors’ rights generally.
2
2.3.2 The
Common Shares, when sold, issued and delivered in compliance with the provisions
of this Agreement, will be duly and validly issued, fully paid and
nonassessable, and shall be free of any liens, preemptive or similar rights,
encumbrances or restrictions on transfer; provided, however, that the Common
Shares may be subject to restrictions on transfer under state and/or federal
securities laws.
|
3.
|
REPRESENTATIONS AND
WARRANTIES OF THE INVESTORS
|
Each
Investor hereby represents and warrants to the Company with respect to the
purchase of the Common Shares to be purchased by it as follows:
3.1 Experience.
Such Investor acknowledges that it is able to bear the economic risk of
its investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Common Shares and is able to bear the economic risk of its investment in
the Common Shares for an indefinite period of time.
3.2 Disclosure
of Information.
Such Investor further represents that it has had an opportunity to ask questions
of and receive answers from the Company regarding the terms and conditions of
the offering of the Common Shares and the business, prospects, properties and
financial condition of the Company.
3.3 Investment. Such
Investor is acquiring the Common Shares for investment for its own account, not
as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof. It understands that the Common Shares
have not been (except for specific registration rights granted to the
Investors), registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Investor’s representations as
expressed herein.
3.4 Accredited
Investors. Such
Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.5 Legends.
It is understood that the certificates evidencing the Common Shares may bear one
or all of the following legends:
|
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED, OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.”
|
|
Any
other legend required by the securities laws of the State of
California.
|
3
3.6 Authorization. The
execution, delivery and performance by such Investor of the Agreements have been
duly authorized by all requisite action of such Investor. The
Agreements, when executed and delivered by such Investor, shall constitute valid
and legally binding obligations of such Investor, enforceable in accordance with
their terms except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally.
|
4.
|
INVESTORS’ CONDITIONS
TO EACH CLOSING
|
Each
Investor’s obligation to purchase the Common Shares at the Closing is, at the
option of such Investor, subject to the fulfillment of the following conditions
on or before the Closing:
4.1 Representations
and Warranties True and Correct. The
representations and warranties made by the Company in Section 2 hereof
shall be true and correct as of the Closing, with the same effect as if made as
of the Closing.
4.2 Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the Closing shall have been performed or complied
with.
|
5.
|
COMPANY’S CONDITIONS
TO EACH CLOSING
|
The
Company’s obligation to sell and issue any Common Shares at the Closing to each
Investor is, at the option of the Company, subject to the fulfillment of the
following conditions as of the Closing:
5.1 Representations
and Warranties True and Correct. The representations and
warranties made by such Investor in Section 3 hereof
shall be true and correct when made, and shall be true and correct at the
Closing.
5.2 Covenants. All
covenants, agreements and conditions contained in this Agreement to be performed
by such Investor on or prior to the Closing shall have been performed or
complied with.
5.3 Purchase
Price Paid. Such
Investor shall have delivered to the Company the purchase price for the Common
Shares set forth in Exhibit A
hereto.
|
6.
|
COVENANTS.
|
6.1 Further
Assurances. The
Company shall cure promptly any defects in the creation and issuance of the
Common Shares, and in the execution and delivery of the
Agreement. The Company, at its expense, shall execute and deliver
promptly to the Investor upon request all such other and further documents,
agreements and instruments as may be reasonably necessary to permit the Company
to comply with its covenants and agreements herein, and shall make any
recordings, file any notices and obtain any consents as may be necessary or
appropriate in connection therewith.
4
6.2 Regulation
D Filings. The
Company shall file on a timely basis all notices of sale required to be filed
with the Securities and Exchange Commission pursuant to Regulation D under the
Securities Act of 1933, as amended (the “Securities
Act”), with respect to the transactions contemplated by this
Agreement.
6.3 Piggyback
Registrations.
6.3.1
Right to Include Common
Shares. Each time that the Company proposes for any reason to register
any of its Common Stock under the Securities Act solely for the account of a
stockholder or stockholders, other than Registration Statements on Forms S-4 or
S-8 (or similar or successor forms) (a “Proposed
Registration”), the Company shall promptly give written notice of such
Proposed Registration to all of the Investors (which notice shall be given in no
event less than ten (10) days prior to the expected filing date of the Proposed
Registration) and shall offer such Investors the right to request inclusion of
any of such Investor’s Common Shares in the Proposed Registration. The rights to
piggyback registration may be exercised on an unlimited number of
occasions.
6.3.2 Piggyback
Procedure. Each Investor shall have five (5) days from the
date of receipt of the Company’s notice referred to in Section 6.3.1 above to
deliver to the Company a written request specifying the number of Common Shares
such Investor intends to sell and such Investor’s intended method of
disposition. Any Investor shall have the right to withdraw such
Investor’s request for inclusion of such Investor’s Common Shares in any
Proposed Registration pursuant to this Section 6.3 by giving written notice to
the Company of such withdrawal; provided, however,
that the Company may ignore a notice of withdrawal made within less than one
full business day prior to the date the Proposed Registration is scheduled to
become effective. Subject to Section 6.3.4 below, the Company shall
use its reasonable best efforts to include in such Proposed
Registration all such Common Shares so requested to be included therein; provided, however, that the
Company may at any time withdraw or cease proceeding with any such Proposed
Registration if it shall at the same time withdraw or cease proceeding with the
registration of all other shares of Common Stock originally proposed to be
registered.
6.3.3 Selection of
Underwriters. The managing underwriter for any Proposed
Registration that involves an underwritten public offering shall be one or more
reputable nationally recognized investment banks selected by the
Company.
6.3.4 Priority for Piggyback
Registration. Notwithstanding any other provision of this
Section 6.3, if the Company determines and advises the Investors in writing that
the inclusion of all Common Shares proposed to be included by the Investors in
the Proposed Registration would materially and adversely interfere with the
potential effectiveness of the Proposed Registration, whether as a result of the
interpretation of Rule 415 promulgated under the Securities Act of 1933, as
amended, or otherwise, then the Investors shall not be permitted to include any
Common Shares in excess of the amount, if any, of Common Shares which the
Company shall reasonably and in good faith agree in writing to include in such
offering.
5
6.3.5 Transfer. The
foregoing registration rights may be transferred to any transferee that acquires
all of the Common Shares.
|
7.
|
MISCELLANEOUS
|
7.1 Closing. Each
Investor hereto expressly acknowledges and agrees that immediately following an
applicable Closing, such Investor shall have deemed such Investor’s conditions
to closing identified in Section 4 hereof to have been satisfied or
waived.
7.2 Governing
Law. This
Agreement shall be governed in all respects by the internal laws of the State of
California, without giving effect to principles of conflicts of law, as applied
to agreements entered into among California State residents to be performed
entirely within California. Each party hereto irrevocably and
unconditionally (i) agrees that any action, suit or claim brought hereunder must
be brought in the courts of the United States in the State of California or the
state courts of the State of California which shall serve as the exclusive
jurisdiction and venue for any and all disputes arising out of and/or relating
to this Agreement; (ii) consents to the jurisdiction of any such court in any
such suit, action or proceeding; and (iii) waives any objection which such party
may have to the laying of venue of any such suit, action or proceeding in any
such court.
7.3 Successors
and Assigns. Except
as otherwise provided herein, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto (including to any transferee of any
Common Shares that is an affiliate of the Investor). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4 Amendment. Any
provision of this Agreement may be amended, waived, modified, discharged or
terminated only with the written consent of the Company and the holders of a
majority of the Common Shares, voting together as a single class. Any
amendment or waiver affected in accordance with this Section 7.4 shall be
binding upon the Company and each holder of any securities subject to this
Agreement (including securities into which such securities are convertible) and
future holders of all such securities. Each Investor may waive his,
her or its rights or the Company’s obligations with respect to its Common Shares
hereunder without obtaining the consent of any other natural person or
Person.
7.5 Notices.
All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given (a) upon personal delivery to the party to be notified,
(b) five (5) days after deposit in the United States mail, by registered or
certified mail, postage prepaid and properly addressed to the party to be
notified as set forth in the Company records, or (c) when received if
transmitted by telecopy (to be followed by U.S. mail), electronic or digital
transmission method. In each case notice shall be sent to the
addresses set forth on the Company’s records or at such other address as a party
may designate by ten (10) days’ advance written notice to the other parties
hereto.
6
7.6 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one and the same instrument.
7.7 Severability. In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision.
7.8 Titles
and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
7.9 Survival of Agreement
All
covenants and agreements made in this Agreement shall survive the execution and
delivery hereof and the issuance, sale and delivery of the Common
Shares. For the avoidance of doubt, the representations and
warranties made in this Agreement shall not survive the execution and delivery
hereof.
7.11
Attorneys'
Fees. If
any action at law or in equity (including arbitration) is necessary to enforce
or interpret the terms of any of the Agreements, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.12
Facsimile
Signatures. This
Agreement may be executed and delivered by facsimile and, upon such delivery,
the facsimile will be deemed to have the same effect as if the original
signature had been delivered to the other party. Each Investor agrees
to deliver to the Company the original signature copy by express overnight
delivery. The failure to deliver the original signature copy and/or
the nonreceipt of the original signature copy shall have no effect upon the
binding and enforceable nature of this Agreement.
7.13
Entire
Agreement. This
Agreement, together with the Exhibits hereto, the certificates, documents,
instruments and writings that are delivered pursuant hereto and each of the
other Agreements, constitutes the entire agreement and understanding of the
parties hereto in respect of its subject matters and supersedes all prior
understandings, agreements, or representations by or among the parties hereto,
written or oral, to the extent they relate in any way to the subject matter
hereof or the transactions contemplated hereby.
[Signature
Pages Follow]
7
Company
Signature Page to Common Stock Purchase Agreement
IN WITNESS WHEREOF, the
parties have executed this Common Stock Purchase Agreement on the day and year
first set forth above.
|
Blue
Holding, Inc.
|
||
|
/s/ Xxxxx X. Xxxxxx
|
||
|
By: Xxxxx
X. Xxxxxx
|
||
|
Title:
Chief Executive Officer
|
Investors
Signature Page to Common Stock Purchase Agreement
|
INVESTOR:
|
||
|
/s/ Xxxx Xxxx
|
||
|
By: Xxxx
Xxxx
|
