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EXHIBIT 10.9
FOREBEARANCE AND DEFERRAL AGREEMENT
THIS FOREBEARANCE AND DEFERRAL AGREEMENT (this "Agreement"), dated
as of June 30, 2005, is made by and among Windswept Environmental Group,
Inc., a Delaware corporation ("WEGI"), Michael O'Reilly, an individual with an
address at c/o WEGI, 100 Sweeneydale Avenue, Bay Shore, New York 11706 ("MOR"),
Dr. Kevin Phillips and Gary Molnar, each of whom is an individual with an
address at c/o FPM Group, Ltd., 909 Marconi Avenue, Ronkonkoma, New York 11779
(together, the "Series A Preferred Stockholders").
W I T N E S S E T H:
WHEREAS, WEGI has (a) granted to Laurus Master Fund, Ltd., a Cayman
Islands company ("Laurus") an option (the "Option") and a warrant (the
"Warrant") to acquire securities of WEGI pursuant to the Securities Purchase
Agreement, dated the date hereof, by and between Laurus and WEGI and (b) sold to
Laurus a secured convertible promissory note in the principal amount of
$5,000,000 (the "Note") with a maturity date of June 30, 2008 (the "Maturity
Date"); and
WHEREAS, an aggregate of $102,000 of accrued dividend payments and
interest due thereon from WEGI to the Series A Preferred Stockholders
pursuant to the Certificate of Designations of Series A Convertible Preferred
Stock of WEGI (the "Certificate of Designations") have accrued and have remained
unpaid over the last five consecutive quarters of WEGI.
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree:
Section 1. Series A Preferred Stockholders.
(a) The Series A Preferred Stockholders hereby agree to forbear from
appointing a second director pursuant to Section 4(d) of the Certificate of
Designations until the earlier of (i) the third anniversary of the date hereof
or (ii) the repayment in full by WEGI of the Note.
(b) The Series A Preferred Stockholders hereby agree to defer the
(i) $1.3 million mandatory redemption due on June 30, 2007, as required by
Section 8(d) of the Certificate of Designations of Series A Convertible
Preferred Stock of WEGI (the "Certificate of Designations") and (ii) payment of
preferred stock dividend payments due as of the date hereof and all preferred
stock dividend payments accruing hereafter pursuant to the terms and provisions
hereof, plus interest at a rate per annum, equal to the higher of
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(a) six percent (6%) of






