Ex. 10.1
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT, dated of as July 15, 2008 by and between
GULF
COAST OIL & GAS, INC. (the "Company"), and YA GLOBAL
INVESTMENTS, L.P.
(formerly, CORNELL CAPITAL PARTNERS, LP) ("YA Global"). All
capitalized terms
used herein shall have the respective meanings assigned thereto in
the
Transaction Documents (as defined below) unless otherwise defined
herein.
W I T N E S S E T H:
WHEREAS, the Company and YA Global have entered into certain
financing
arrangements set forth on Schedule A attached hereto and referred
to herein as
the "Transaction Documents" pursuant to which, YA Global is the
holder of the
following secured convertible debentures (collectively, the
"Debentures") issued
by the Company:
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DEBENTURE DESCRIPTION
PRINCIPAL OUTSTANDING
ACCRUED AND UNPAID INTEREST
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10% Secured
Convertible Debenture
issued
USD $403,454.13
$ 115,279.14
on February 1, 2006,
due February 1, 2009
in the
face
amount
of $500,000.
(Debenture No. CCP-1)
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10% Secured
Convertible Debenture
issued
USD $0
$ 55,027.61
on April 5, 2006,
due April 5, 2009 in
the face amount of
$500,000. (Debenture
No. CCP-2)
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The amounts referenced in this chart above are as of June 1, 2008
and
do not include any additional costs, charges, expenses, or
liquidated damages.
WHEREAS, the Company has breached the terms of the Transaction
Documents as set forth in the default letter dated March 17, 2008
(the "Existing
Defaults") a copy of which is attached hereto as Exhibit A; and
WHEREAS, YA Global is willing to agree to forbear from
exercising
certain of its rights and remedies on the terms and conditions
specified herein;
NOW, THEREFORE, in consideration of the foregoing, and the
respective
agreements, warranties and covenants contained herein, the parties
hereto agree,
covenant and warrant as follows:
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1.
ACKNOWLEDGMENTS.
a.
Acknowledgement of Obligations. The Company hereby
acknowledges,
confirms and agrees that as of the date hereof, the Company is
indebted to YA Global under the Debentures and the Transaction
Documents in the outstanding principal amount plus accrued and
unpaid interest thereon set forth in the first Whereas clause
above. In addition to the principal and interest set forth
herein, all interest accrued and accruing hereafter and all
liquidated damaged, fees, costs, expenses and other charges now
or hereafter payable by the Company to YA Global under the
Transaction Documents (collectively, the "Obligations"), are
unconditionally owing by the Company to YA Global, without
offset, defense or counterclaim of any kind, nature or
description whatsoever.
b.
Acknowledgement of Security Interests. The Company hereby
acknowledges, confirms and agrees that YA Global has and shall
continue to have valid, enforceable and perfected
first-priority
liens upon and security interests in the Pledged Property
heretofore granted to YA Global pursuant to the Security
Agreement between the Company and YA Global dated February 1,
2006 or otherwise granted to or held by YA Global. The Company
hereby acknowledges, confirms and agrees that YA Global has and
shall continue to have valid, enforceable and perfected
first-priority liens upon and security interests in the Pledged
Property heretofore granted to YA Global pursuant to the
Security
Agreement between the Company and YA Global dated February 1,
2006 or otherwise granted to or held by the YA Global.
c. Binding
Effect of Documents. The Company hereto acknowledges,
confirms and agrees that: (a) each of the Transaction Documents
to which it is a party has been duly executed and delivered to
YA
Global by the Company, and each is in full force and effect as
of
the date hereof, (b) the agreements and obligations of the
Company contained in such documents and in this Agreement
constitute the legal, valid and binding obligations of the
Company, enforceable against each in accordance with their
respective terms, and the Company has no valid defense to the
enforcement of such obligations, and (c) YA Global is and shall
be entitled to the rights, remedies and benefits provided for
in
the Transaction Documents and applicable law, without setoff,
defense or counterclaim of any kind, nature or descriptions
whatsoever.
2.
FORBEARANCE IN RESPECT OF CERTAIN EVENTS OF DEFAULT.
a.
Acknowledgement of Default. The Company hereby acknowledges and
agrees that the Existing Defaults have occurred and are
continuing, and each constitutes an Event of Default and
entitles
YA Global to exercise its rights and remedies under the
Transaction Documents, applicable law or otherwise. The Company
further represents and warrants that as of the date hereof no
other Event of Default under the Transaction Documents exist.
YA
Global has not waived, presently do not intend to waive and may
never waive such Existing Defaults and nothing contained herein
or the transactions contemplated hereby shall be deemed to
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constitute any such waiver. The Company hereby acknowledges and
agrees that YA Global has the presently exercisable right to
declare the Obligations to be immediately due and payable under
the terms of the Transaction Documents.
b.
Forbearance.
i. In reliance
upon the representations, warranties and
covenants of the Company contained in this Agreement, and
subject to the terms and conditions of this Agreement and
any documents or instruments executed in connection
herewith, YA Global agrees to forbear from exercising its
rights and remedies under the Transaction Documents or
applicable law in respect of or arising out of the Existing
Defaults, subject to the conditions, amendments and
modifications contained herein for the period (the
"Forbearance Period") commencing on the date hereof and
ending on September 30, 2008, so long as the following
conditions are met: (i) the Company strictly complies with
the terms of this Agreement, and (ii) there is no occurrence
or existence of any Event of Default, other than the
Existing Defaults.
ii. Upon the
termination or expiration of the Forbearance
Period, the agreement of YA Global to forbear shall
automatically and without further action terminate and be of
no force and effect, it being expressly agreed that the
effect of such termination will be to permit YA Global to
exercise such rights and remedies immediately, including,
but not limited to, the acceleration of all of the
Obligations without any further notice, passage of time or
forbearance of any kind. This Agreement shall be deemed to
satisfy any and all requirements by YA Global to notify
