AMENDMENT AGREEMENT
This
Amendment Agreement (this “Agreement”),
dated
as of July 30, 2008, is entered into by and among
BLUE
HOLDINGS, INC., a Nevada corporation (the “Company”),
ANTIK
DENIM, LLC, a California limited liability company and wholly-owned subsidiary
of the Company (“Antik”),
TAVERNITI SO JEANS, LLC, a California
limited liability company and wholly-owned subsidiary of the Company
(together
with Antik, the “Guarantors”,
and
each individually, a “Guarantor”),
GEMINI STRATEGIES, LLC, a Delaware limited liability company (the “Collateral
Agent”),
and
GEMINI MASTER FUND, LTD., a Cayman Islands corporation (the “Investor”).
The
Company and the Guarantors are sometimes referred to herein individually as
a
“Blue
Entity”
and
collectively as the “Blue
Entities”.
RECITALS:
WHEREAS,
the Company and the Investor are party to that certain Securities Purchase
Agreement, dated as of March 5, 2008 (the “Purchase
Agreement”),
pursuant to which the Company issued to the Investor (i) an 8% Senior Secured
Convertible Note in the original principal amount of $2 million (the
“Note”),
convertible
into
shares of common stock of the Company, par
value
$0.001 per share (the “Common
Stock”),
and
(ii)
a Warrant to purchase 875,000 shares of Common Stock (the “Warrant”);
WHEREAS,
the Guarantors have entered into that certain Subsidiary Guarantee, dated as
of
March 5, 2008 (the “Guarantee”),
pursuant to which each Guarantor has guaranteed the satisfaction of all the
obligations of the Company under the Existing Transaction Documents (as defined
below);
WHEREAS,
Antik has entered into that certain Intellectual Property Security Agreement,
dated as of March 5, 2008 (the “Antik IP Security
Agreement”),
pursuant to which Antik granted a security interest in its intellectual property
to the Investor and the Collateral Agent to secure the satisfaction of all
the
obligations of the Blue Entities under the Existing Transaction
Documents;
WHEREAS,
the Company and the Guarantors have entered into that certain Security Agreement
and that certain Intellectual Property Security Agreement, each dated as of
March 5, 2008 (collectively, and together with the Antik IP Security Agreement,
the “Security
Agreements”),
pursuant to which the Company and the Guarantors have each granted a security
interest in its assets and properties to the Investor and the Collateral Agent
to secure the satisfaction of all the obligations of the Blue Entities under
the
Existing Transaction Documents;
WHEREAS,
the Company is in breach of certain of its obligations under the Existing
Transaction Documents, and the Company has requested that the Investor waive
such breaches in accordance with and in consideration for the terms and
conditions described in this Agreement; and
WHEREAS,
pursuant to a placement agency engagement agreement with Granite Financial
Group, LLC (“Granite”),
the
Company issued to Granite (i) an 8% Senior Secured Convertible Note in the
original principal amount of $86,400 (the “Granite Note”),
convertible
into
shares of Common Stock, and
(ii)
a Warrant to purchase 150,000 shares of Common Stock (the “Granite Warrant”),
in
connection with the closing of the transactions under the Purchase
Agreement
1
AGREEMENT:
NOW,
THEREFORE, in consideration of the foregoing and subject to the terms and
conditions herein contained, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 Certain
Defined Terms.
As used
in this Agreement, the following terms shall have the meanings set forth
below:
“Existing
Transaction Documents”
means
the Purchase Agreement, the Note, the Warrant, the Security Agreements, the
Guarantee and all other agreements, instruments and other documents executed
and
delivered by or on behalf of the Blue Entities or any of their officers in
connection with any of the foregoing agreements.
“Transaction
Documents”
means
the Existing Transaction Documents (as amended by this Agreement), this
Agreement, the Amended and Restated Note (as
defined below),
the
Amended and Restated Warrant (as
defined below),
and all
other agreements, instruments and other documents executed and delivered by
or
on behalf of the Blue Entities or any of their officers in connection with
this
Agreement.
1.2 Terms
Defined in the Purchase Agreement.
Capitalized
terms used in this Agreement and not otherwise defined herein have the
respective meanings ascribed to them in the Purchase Agreement.
2. ACKNOWLEDGEMENT
AND WAIVER.
2.1 Existing
Breaches.
The
Blue Entities acknowledge, agree and represent that the following breaches
have
occurred and are continuing as of the date hereof under the Existing Transaction
Documents:
| (a) |
as
of March 5, 2008, the Company’s representations to the Investor as to the
Company’s financial position, the accuracy of the Company’s public filings
for fiscal 2007, and the Company’s system of internal accounting controls
and disclosure controls and procedures were incorrect due to accounting
errors in the Company’s related party accounts, discovered and publicly
disclosed after March 5, 2008, pertaining to royalties and payables
that
were initially recognized and subsequently written off in error, and
rental expenses that were not recorded;
and
|
2
| (b) |
the
Company has failed to timely file (or obtain extensions in respect
thereof
and file within the applicable grace period) all reports required to
be
filed by the Company pursuant
to the Exchange Act.
|
2.2 Waiver
of Existing Breaches.
Upon
the satisfaction of the conditions specified in Section
2.3,
each of
the Investor and Granite shall be deemed to have waived the breaches specified
in Section
2.1 of
this
Agreement and the resulting Events of Default under Sections 8(a)(ii), (iii),
(iv) and (ix) of the Note; provided,
however,
that
nothing herein shall be deemed to be a waiver by the Investor of any breaches
under the Existing Transaction Documents that are not expressly specified in
Section
2.1,
whether
now or hereafter existing.
2.3 Specified
Conditions to Waiver.
Each of
the Investor’s and Granite’s waiver under Section
2.2
shall
not be effective unless and until each of the following conditions has been
satisfied by the Blue Entities:
| (a) |
each
of the Blue Entities shall have executed and delivered this Agreement
to
the Investor;
|
| (b) |
the
Company shall have reserved the requisite number of shares of Common
Stock
for issuance as required by Section
4.2 of
this Agreement;
|
| (c) |
the
Blue Entities shall have delivered to the Investor a copy of an
irrevocable written consent executed by Xxxx Xxxx, as a stockholder
holding a majority of the outstanding shares of Common Stock, approving
the transactions contemplated under this Agreement (including without
limitation the issuance of all of the Underlying Shares in excess of
19.99% of the issued and outstanding Common Stock on the date of the
Purchase Agreement) on or prior to the date of this Agreement in
accordance with the requirements of the applicable
rules and regulations of the Nasdaq Stock Market (or any successor
entity)
(“Shareholder
Approval”),
and the Shareholder Approval shall be subject only to the subsequent
delivery to the Company’s shareholders of an information statement in
accordance with applicable securities laws, rules and regulations (the
“New Information
Statement”);
and
|
| (d) |
each
Blue Entity shall have delivered to the Investor a Secretary’s Certificate
certifying true and complete copies of the minutes or resolutions of
such
Blue Entity’s board of directors or manager, as applicable, authorizing
and approving the transactions contemplated by this Agreement and the
other Transaction Documents to which such Blue Entity is a
party.
|
2.4 Waiver
of Anticipated Breach.
The
Company anticipates that the Common Stock shall not be eligible for listing
or
quotation on a Trading Market subsequent to the date of this Agreement and
prior
to the filing of all
reports required to be filed by it under the Exchange Act,
and
shall not be eligible to resume listing or quotation for trading on a Trading
Market within five Trading Days of such ineligibility. To the extent such
ineligibility occurs, the Company covenants to use its best efforts to take,
or
cause to be taken, all action necessary to resume listing or quotation of the
Common Stock on a Trading Market as soon as practicable following the filing
of
all reports required to be filed by it under the Exchange Act (but in any event
no later than October 15, 2008), and each of the Investor and Granite hereby
waive, until October 15, 2008, the ineligibility for listing or quotation of
the
Common Stock on a Trading Market and the resulting Events of Default under
Sections 8(a)(ii), (iii), (iv) and (vii) of the Note (provided such best efforts
are made before such date).
3
3. AMENDMENT
AND RESTATEMENT OF NOTES AND WARRANTS.
3.1 The
Note.
The
Note shall be amended and restated in the form attached hereto as Exhibit
A
(the
“Amended
and Restated Note”),
which
shall provide, among other things, that (i) the original principal face amount
of the Note is $2,500,000, and (ii) the Conversion Price (as defined therein)
in
effect as of the date hereof is $0.40 (subject to further adjustment as provided
therein).
3.2 The
Warrant.
The
Warrant shall be amended and restated in the form attached hereto as
Exhibit
B
(the
“Amended
and Restated Warrant”),
which
shall provide, among other things, that (i) the aggregate number of shares
of
Common Stock for which such warrant is exercisable as of the date hereof is
2,187,500 shares (subject to further adjustment as provided therein), and (ii)
the Exercise Price (as defined therein) in effect as of the date hereof is
$0.40
(subject to further adjustment as provided therein).
3.3 The
Granite Note.
The
Granite Note shall be amended and restated, consistent with the amendments
to
the Note, to provide, among other things, that (i) the original principal face
amount of the Granite Note is $108,000, and (ii) the Conversion Price (as
defined therein) in effect as of the date hereof is $0.40 (subject to further
adjustment as provided therein) (the “Granite Amended
and Restated Note”).
3.4 The
Granite Warrant.
The
Granite Warrant shall be amended and restated, consistent with the amendments
to
the Warrant, to provide, among other things, that (i) the aggregate number
of
shares of Common Stock for which such warrant is exercisable as of the date
hereof is 244,500 shares (subject to further adjustment as provided therein),
and (ii) the Exercise Price (as defined therein) in effect as of the date hereof
is $0.40 (subject to further adjustment as provided therein) (the “Granite Amended
and Restated Warrant”).
3.5 Delivery.
The
Company hereby irrevocably commits to deliver the Amended and Restated Note,
Amended and Restated Warrant, Granite Amended and Restated Note and Granite
Amended and Restated Warrant to each of the Investor and Granite, as applicable,
promptly following the fifteenth day after the filing of a Notification Form:
Listing of Additional Shares with the Nasdaq Stock Market regarding the shares
underlying the Transaction Documents in exchange for the Note, the Warrant,
the
Granite Note and the Granite Warrant, as applicable.
4
4. ADDITONAL
AMENDMENTS AND OTHER AGREEMENTS.
4.1 Exchange
Act Reporting Requirements.
On or
prior to September 30, 2008, the Company shall have filed with the Commission
all reports required to be filed by it under the Exchange Act by issuers that
are subject to the reporting requirements of the Exchange Act (whether or not
the Company is subject to the reporting requirements of the Exchange Act),
and
the Company shall thereafter continue to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all
such
reports with the Commission. Any waiver of compliance with Section 4.3 of the
Purchase Agreement hereunder, and of resulting Events of Default under Sections
8(a)(ii), (iii), (iv) and (ix) of the Note (as amended hereby), shall be
applicable only until such date.
4.2 Reservation
of Common Stock.
At all
times hereafter the Company shall cause to be authorized and reserved for
issuance to the Investor
from its
duly authorized capital stock a number of shares of Common Stock for issuance
of
the Underlying Shares at least equal to the Required Minimum (after
taking into account the amendments contemplated hereby).
4.3 References
to Notes, Warrants and Transaction Documents.
All
references in the Existing Transaction Documents to (i) “Notes” shall be deemed
to be references to the Amended and Restated Note (together with any future
Notes issued pursuant to the Purchase Agreement), (ii) “Warrants” shall be
deemed to be references to the Amended and Restated Warrant (together with
any
future Warrants issued pursuant to the Purchase Agreement), and (iii)
“Transaction Documents” shall be deemed to mean
the
Existing Transaction Documents (as amended by this Agreement), this Agreement,
the Amended and Restated Note (together
with any future Notes issued pursuant to the Purchase Agreement),
the
Amended and Restated Warrant (together
with any future Warrants issued pursuant to the Purchase Agreement),
and all
other agreements, instruments and other documents executed and delivered by
or
on behalf of the Blue Entities or any of their officers in connection with
this
Agreement.
4.4 Indemnification
of Investor and Collateral Agent.
Each of
the Blue Entities will jointly and severally indemnify and hold the Investor
and
Collateral Agent and each of their directors, managers, officers, shareholders,
members, partners, employees and agents (each, an “Investor
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Investor Party may suffer or incur as a result
of or
relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by a Blue Entity in this Agreement or in the other
Transaction Documents or (b) any action instituted against the Investor, or
any
of its Affiliates, by any shareholder of a Blue Entity who is not an Affiliate
of the Investor, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of the
Investor’s representation, warranties or covenants under the Transaction
Documents or any agreements or understandings the Investor may have with any
such shareholder or any violations by the Investor of state or federal
securities laws or any conduct by the Investor which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Investor Party in respect of which indemnity may be sought pursuant
to this Agreement, such Investor Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof
with
counsel of its own choosing. Any Investor Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof,
but
the fees and expenses of such counsel shall be at the expense of such Investor
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time following such Investor Party’s written request that
it do so, to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of a Blue Entity and the
position of such Investor Party. None of the Blue Entities will be liable to
any
Investor Party under this Agreement (i) for any settlement by an Investor Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to such Investor Party’s
wrongful actions or omissions, or gross negligence or to such Investor Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Investor in this Agreement or in the other Transaction
Documents.
5
4.5 Rule
144.
The
Company acknowledges and agrees that, for purposes of Rule 144 promulgated
under
the Securities Act, the holding period for the Underlying Shares issuable upon
conversion or exercise of, or otherwise pursuant to, the Amended and Restated
Note and/or the Amended and Restated Warrant (and the Granite Amended and
Restated Note and Granite Amended and Restated Warrant) shall have commenced
on
March 5, 2008 (the date of original issuance of the Note and the Warrant).
Without limiting the foregoing, if at any time it is determined that such
holding period does not relate back to such date, the Company will promptly,
but
no later than 30 days thereafter, cause the registration of all such Underlying
Shares under the Securities Act (without regard to any beneficial ownership
or
issuance limitations contained in the Amended and Restated Note and/or the
Amended and Restated Warrant). In connection with any registration of Underlying
Shares pursuant to this Section, the Company and the Investor shall enter into
a
registration rights agreement containing customary and reasonable provisions
regarding the registration of securities under the Securities Act.
4.6 Disclosure.
The
Company shall, by 8:30 a.m. (New York City time) on the third Trading Day
following the date on which this Agreement is executed by all parties hereto,
issue a Current Report on Form 8-K disclosing the material terms of the
transactions contemplated hereby and attaching this Agreement as an exhibit
thereto. The Company and the Investors shall consult with each other in issuing
any other press releases with respect to the transactions contemplated
hereby.
4.7 Security
Continued.
The
Blue Entities’ obligations under all the Transaction Documents, including
without limitation this Agreement, the Amended
and Restated Note and the Amended and Restated Warrant,
shall be
secured by all the assets of the Blue Entities pursuant to the Security
Agreements as if this Agreement, the Amended
and Restated Note and the Amended and Restated Warrant were each in effect
at
the time of execution of such Security Agreements and referenced
therein.
The
Company shall execute such other agreements, documents and financing statements
reasonably requested by Investor, which will be filed at the Company’s expense
with the applicable jurisdictions and authorities.
4.8 New
Information Statement.
The
Blue Entities shall cause the New Information Statement to be delivered to
all
the shareholders of the Company in accordance with all applicable securities
laws, rules and regulations such that the Shareholder Approval becomes effective
within 60 days following the date of this Agreement and cause the Shareholder
Approval to become effective within such time period. If for any reason such
Shareholder Approval does not become effective within such 60-day period,
without limiting any of the Investor’s rights or remedies under the Transaction
Documents the Company shall hold a special meeting of shareholders (which may
also be at the annual meeting of shareholders) no later than October 31, 2008
for the purpose of obtaining Shareholder Approval, with the recommendation
of
the Company’s Board of Directors that such proposal be approved, and the Company
shall solicit proxies from its shareholders in connection therewith in the
same
manner as all other management proposals in such proxy statement and all
management-appointed proxyholders shall vote their proxies in favor of such
proposal. If the Company does not obtain Shareholder Approval at the first
such
meeting, the Company shall call a meeting every four months thereafter to seek
Shareholder Approval until the earlier of the date Shareholder Approval is
obtained or the Amended and Restated Notes are no longer
outstanding.
6
5. REPRESENTATIONS
AND WARRANTIES OF THE BLUE ENTITIES.
Each
of
the Blue Entities hereby jointly and severally represents and warrants to the
Investor as of the date hereof:
5.1 Organization.
Such
Blue Entity is duly organized, validly existing and in good standing under
the
laws of its organization.
5.2 Authorization.
Such
Blue Entity has the requisite corporate power and authority to execute, deliver
and perform this Agreement and the other Transaction Documents to which it
is a
party. All
corporate action on the part of such Blue
Entity
and by
its officers, directors and shareholders necessary for the authorization,
execution and delivery of, and the performance by such Blue
Entity
of its
obligations under this Agreement and the other Transaction Documents to which
it
is a party has been taken, and no further consent or authorization of any other
party is required.
5.3 Enforceability.
This
Agreement and the other Transaction Documents to which such Blue Entity is
a
party constitute such Blue Entity’s valid and legally binding obligation,
enforceable in accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity.
5.4 No
Conflicts.
The
execution, delivery and performance of this Agreement and the other Transaction
Documents to which such Blue Entity is a party, and the consummation of the
transactions contemplated hereby and thereby, will not result in any violation
of any provisions of any of such Blue
Entity’s
organizational documents or in a default under any provision of any instrument
or contract to which such Blue
Entity
is a
party or by which any of its assets are bound, or in violation of any provision
of any governmental requirement applicable to such Blue
Entity
or be in
conflict with or constitute, with or without the passage of time and giving
of
notice, either a default under any such provision, instrument or contract or
the
triggering of any preemptive or anti-dilution rights (including
without limitation pursuant to any “reset” or similar provisions) or
rights
of first refusal or first offer.
7
5.5 Valid
Issuance.
The
Amended and Restated Note and the Amended and Restated Warrant (and the Granite
Amended and Restated Note and Granite Amended and Restated Warrant) have been
duly authorized and, when issued and delivered in accordance with the terms
of
this Agreement, will be duly and validly issued, free and clear of any Liens
imposed by or through any of the Blue
Entities.
5.6 Reservation
of Common Stock.
The
Company has authorized and reserved for issuance to the Investor
from its
duly authorized capital stock a number of shares of Common Stock for issuance
of
the Underlying Shares at least equal to the Required Minimum on the date
hereof,
after
taking into account the amendments contemplated hereby.
6. REPRESENTATIONS
AND WARRANTIES OF THE INVESTOR.
The
Investor represents and warrants to the Company as of the date
hereof:
6.1 Organization.
The
Investor is duly organized, validly existing and in good standing under the
laws
of its organization.
6.2 Authorization.
The
Investor has the requisite corporate power and authority to execute, deliver
and
perform this Agreement and the other Transaction Documents to which it is a
party. All
corporate action on the part of the Investor
and by
its officers, directors and shareholders necessary for the authorization,
execution and delivery of, and the performance by the Investor
of its
obligations under this Agreement and the other Transaction Documents to which
it
is a party has been taken, and no further consent or authorization of any other
party is required.
6.3 Enforceability.
This
Agreement and the other Transaction Documents to which the Investor is a party
constitute the Investor’s valid and legally binding obligation, enforceable in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity.
6.4 No
Conflicts.
The
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Investor is a party, and the consummation of the
transactions contemplated hereby and thereby, will not result in any violation
of any provisions of any of the Investor’s
organizational documents or in a default under any provision of any instrument
or contract to which the Investor
is a
party or by which any of its assets are bound, or in violation of any provision
of any governmental requirement applicable to the Investor
or be in
conflict with or constitute, with or without the passage of time and giving
of
notice, a default under any such provision, instrument or contract.
6.5 Investment
Representations.
The
representations made by the Investor in Sections 3.2(b) through (f) of the
Purchase Agreement are true and accurate as of the date of this Agreement as
if
set forth in their entirety in this Agreement.
8
7. MISCELLANEOUS.
7.1 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; provided
that in
such case the parties shall negotiate in good faith to replace such provision
with a new provision which is not illegal, unenforceable or void, as long as
such new provision does not materially change the economic benefits of this
Agreement to the parties.
7.2 Successors
and Assigns.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason
of
this Agreement, except as expressly provided in this Agreement. The Investor
may
assign its rights and obligations hereunder, as long as, as a condition
precedent to such transfer, the transferee executes an acknowledgment agreeing
to be bound by the applicable provisions of this Agreement, in which case the
term “Investor” shall be deemed to refer to such transferee as though such
transferee were an original signatory hereto. None of the Blue
Entities
may
assign its rights or obligations under this Agreement.
7.3 No
Reliance.
Each
party acknowledges that (i) it has such knowledge in business and financial
matters as to be fully capable of evaluating this Agreement and the transactions
contemplated hereby and thereby, (ii) it is not relying on any advice or
representation of any other party in connection with entering into this
Agreement or such transactions (other than the representations made in this
Agreement), (iii) it has not received from any other party any assurance or
guarantee as to the merits (whether legal, regulatory, tax, financial or
otherwise) of entering into this Agreement or the performance of its obligations
hereunder and thereunder, and (iv) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting advisors to
the
extent that it has deemed necessary, and has entered into this Agreement based
on its own independent judgment and, if applicable, on the advice of such
advisors, and not on any view (whether written or oral) expressed by any other
party.
7.4 Injunctive
Relief.
Each of
the Blue
Entities
acknowledges and agrees that a breach by it of its obligations hereunder will
cause irreparable harm to the Investor and that the remedy or remedies at law
for any such breach will be inadequate and agrees, in the event of any such
breach, in addition to all other available remedies, the Investor shall be
entitled to an injunction restraining any breach and requiring immediate and
specific performance of such obligations without the necessity of showing
economic loss or the posting of any bond.
7.5 Governing
Law; Jurisdiction; Waiver of Jury Trial.
(a)
This Agreement shall be governed by and construed under the laws of the State
of
New York applicable to contracts made and to be performed entirely within the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City and County
of
New York for the adjudication of any dispute hereunder or any other Transaction
Document or in connection herewith or therewith or with any transaction
contemplated hereby or thereby, and hereby irrevocably waives, and agrees not
to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
9
(b)
EACH
PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY
IRREVOCABLY
AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO
THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR
THE
OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
7.6 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, and all of which together shall constitute one and the
same
instrument. This Agreement may be executed and delivered by facsimile
transmission or by email of a digital image format file.
7.7 Headings.
The
headings used in this Agreement are used for convenience only and are not to
be
considered in construing or interpreting this Agreement.
7.8 Notices.
Any
notice, demand or request required or permitted to be given by a Blue Entity
or
the Investor pursuant to the terms of this Agreement shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the
next
succeeding Business Day, (ii) on the next Business Day after timely delivery
to
an overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed in accordance with the notice provisions
contained in the Purchase Agreement.
7.9 Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents constitute the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties.
7.10 Fees
and Expenses.
The
Blue Entities and the Investor shall pay all costs and expenses that it incurs
in connection with the negotiation, execution, delivery and performance of
this
Agreement and the other Transaction Documents, provided,
however,
that
the Company shall, concurrently with the execution of this Agreement, pay the
Investor the
non-accountable sum of $10,000 in
immediately available funds for
its
expenses (including
without limitation legal fees and expenses) incurred or to be incurred by it
in
connection with the Company’s defaults described herein and with the negotiation
and preparation of this Agreement and the other Transaction Documents to be
delivered in connection herewith.
10
7.11 Full
Force and Effect.
Except
as specifically waived and amended hereby and for the purposes described herein,
the Existing Transaction Documents shall remain in full force and effect in
accordance with their respective terms. Except for the waiver and amendment
contained herein, this Agreement shall not in any way waive or prejudice any
of
the rights of the Investor or obligations of the Company under the Transaction
Documents, or under any law, in equity or otherwise, and such waiver and
amendment shall not constitute a waiver or amendment of any other provision
of
the Transaction Documents nor a waiver or amendment of any subsequent default
or
breach of any obligation of the Company or of any subsequent right of the
Investor.
[Signature
Page to Follow]
11
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the day and year first above written.
| BLUE HOLDINGS, INC. | GEMINI MASTER FUND, LTD. | |||
| By: | GEMINI STRATEGIES, LLC, as investment manager | |||
| By: | /s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxxx Xxxxxxx | |
|
Name:
|
Xxxxx X. Xxxxxx |
Name: |
Xxxxxx Xxxxxxx |
|
| Title: | CEO | Title: | President | |
| ANTIK DENIM, LLC. | GEMINI STRATEGIES, LLC | |||
| By: | /s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxxx Xxxxxxx | |
| Name: |
Xxxxx X. Xxxxxx |
Name: |
Xxxxxx Xxxxxxx |
|
| Title: | CEO | Title: | President | |
| TAVERNITI SO JEANS, LLC | ||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: |
Xxxxx X. Xxxxxx |
|||
| Title: | CEO | |||
| GRANITE FINANCIAL GROUP, LLC | ||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Name: |
Xxxxxx X. Xxxxxxxxx |
|||
|
Title:
|
President | |||
