Renewal Fuels, Inc (RNWF)

[jonesieatl]

8-K out, Default and Forbearance

http://www.sec.gov/Archives/edgar/data/96664/000136110608000107/renewalfuels_8k-043008.htm

Item 1.01 Entry into a Material Definitive Agreement

On April 28, 2008, Renewal Fuels, Inc. (the “Company”) entered into a Forbearance Agreement (the “Agreement”) with Montgomery Equity Partners, Ltd. (“Montgomery”) and YA Global Investments, L.P. (“YA”). Montgomery and YA (collectively, “Lenders”) are holders of secured convertible indebtedness of the Company (the “Indebtedness”) having an aggregate principal balance of approximately $4,249,720, and aggregate accrued unpaid interest of approximately $562,920.23, as of April 21, 2008.

Pursuant to the Agreement, the Company gave formal written notice to the Lenders of events constituting defaults under the notes and other documents evidencing and securing the Indebtedness (the “Loan Documents”), that are continuing, including the Company’s failure to repay a portion of the Indebtedness that had matured.

Pursuant to the Agreement, Lenders agreed to forbear from exercising their rights and remedies under the Loan Documents until September 30, 2008, unless and until there is a new default under the Loan Documents. In connection with the Forbearance Agreement, the Company agreed (a) to amend the warrant entitling YA to purchase 1,050,000 common shares of the Company, to reduce the exercise price to $.001 per share; (b) to increase the interest rate payable on the Indebtedness to 13% per annum; (c) to allow the Company to prepay the Indebtedness at any time prior to September 30,2008; (d) to extend the maturity of the portion of the debentures due December 28, 2006 (evidencing a portion of the Indebtedness in the aggregate principal amount of $549,720, and being the only portion of the Indebtedness that has or will mature prior to September 30,2008) to September 30, 2008; and (e) for the Company’s cash deposits, to enter into a Deposit Account Control Agreement with a bank that, upon the earlier of a new default under the Loan Documents or September 30, 2008, gives YA exclusive and immediate control over the Company’s cash deposits in such account.