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FOREBEARANCE AND DEFERRAL AGREEMENT

Deferred Unit Award Agreement

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This Deferred Unit Award Agreement involves

Windswept Environmental Group, Inc.

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Title: FOREBEARANCE AND DEFERRAL AGREEMENT
Governing Law: New York     Date: 7/7/2005
Industry: WASTEM     Sector: SERVIC

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EXHIBIT 10

 

                                                                 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 

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