Blue Holdings amends $2 million Gemini convertible, warrants

By Devika Patel

Knoxville, Tenn., Aug. 4 - Blue Holdings, Inc. amended its agreement with Gemini Master Fund, Ltd., the holder of the company's $2 million 30-month senior secured convertible note and a five-year warrant for 875,000 shares, according to an 8-K filed Monday with the Securities and Exchange Commission.

The securities were issued in a March 5 private placement.

The company and Gemini agreed to exchange the existing 8% note for an amended and restated 8% senior secured convertible note in exchange for Gemini waiving certain breaches under the existing note.

The new $2.5 million note will have a term of approximately 30 months commencing from March 5, 2008.

The new warrant will have a term of five years, also commencing from March 5 and will be exercisable for 2,187,500 common shares at $0.40 per share.

The new note will carry interest at 8% per annum on the unpaid and unconverted principal balance, and is secured on a second priority basis against all of the company's assets.

One-twenty-fourth of the note's principal and interest is due and payable monthly in 24 installments beginning on Oct. 1.

These installment payments can be made in cash or stock, provided that certain equity conditions are met.

The new note is convertible into approximately 6.25 million shares, based on a conversion price equal to $0.40 per share.

Additionally, beginning March 5, 2009, the company can force conversion if the volume-weighted average price of Blue Holdings' common stock for any 20 out of 30 consecutive trading days exceeds $0.80 and certain equity conditions are met.

Based on Commerce, Calif., Blue Holdings designs, develops, markets and distributes high-end fashion jeans, apparel and accessories.

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