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FOREBEARANCE AND DEFERRAL AGREEMENT

Deferred Unit Award Agreement

FOREBEARANCE AND DEFERRAL AGREEMENT | Document Parties: Windswept  Environmental  Group, Inc. You are currently viewing:
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Title: FOREBEARANCE AND DEFERRAL AGREEMENT
Governing Law: New York     Date: 7/7/2005
Industry: Waste Management Services     Sector: Services

FOREBEARANCE AND DEFERRAL AGREEMENT, Parties: windswept  environmental  group  inc.
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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

 

 

<PAGE>

 

 

(a)   six   percent   (6%) of   the   Stated Value (as defined in the   Certificate of

Designations)   and (b) a percentage   of the Stated Value equal to the   Inflation

Rate (as   defined in the   Certificate   of   Designations)   plus two and   one-half

percent (2 1/2 %),   except as   provided   in Section 2 below until the earlier of

(1) six months   after the   repayment in full by WEGI of the Note or (2) June 30,

2010.

 

            (c) The Series A Preferred Stockholders hereby agree to vote any and

all   of the shares of the Common Stock for which they have voting power in favor

of the Authorization Amendment (as defined below).

 

Section 2.   WEGI.

            ----

 

            (a) WEGI   hereby   agrees   to grant to ea


 
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