Exhibit 10.01

 

AMENDMENT AND FEE WAIVER AGREEMENT

 

This Amendment and Fee Waiver Agreement dated as of January 13, 2006 (the
“Amendment and Fee Waiver Agreement”) is entered into by and between Windswept
Environmental Group, Inc., a Delaware corporation (the “Borrower”), and Laurus
Master Fund, Ltd., a Cayman Islands company (“Laurus”), and is effective as of
January 13, 2006. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Securities Purchase Agreement (as
defined below) and the Note (as defined below).

 

WHEREAS, the Borrower filed a registration statement on October 3, 2005 (as
amended, modified or supplemented, the “Registration Statement”), in order to
register certain shares of the Borrower’s Common Stock (as amended, modified or
supplemented, the “Common Stock”) underlying (a) an Amended and Restated Secured
Convertible Term Note the Borrower issued to Laurus on October 6, 2005 in the
aggregate original principal amount of $7,350,000 (as amended, modified or
supplemented, the “Note”) pursuant to the terms of the Securities Purchase
Agreement, dated as of June 30, 2005 between the Borrower and Laurus (as
amended, modified or supplemented, the “Securities Purchase Agreement” and
together with the Related Agreements as defined therein, the “Loan Documents”);
(b) a warrant issued by the Borrower to Laurus on June 30, 2005 to purchase
13,750,000 shares of the Common Stock (as amended, modified or supplemented, the
“Warrant”); and (c) an option issued by the Borrower to Laurus on June 30, 2005
to purchase 30,395,179 shares of Common Stock (as amended, modified or
supplemented, the “Option”);

 

WHEREAS, the Borrower and Laurus entered into an Amendment and Fee Waiver
Agreement dated as of November 23, 2005 (the “November 23rd Amendment”);

 

WHEREAS, pursuant to Section 3.7 of the Note and Section 1 of the November 23rd
Amendment, the Borrower is obligated to reserve from its authorized and unissued
shares of Common Stock a sufficient number of shares to provide for the issuance
of shares upon the full conversion and/or exercise of the Warrant, the Option
and the Note after the earlier to occur of (x) January 31, 2006 and (y) the date
of the Borrower’s next shareholder's meeting (the “Additional Authorization
Date”);

 

WHEREAS, pursuant to Section 6 of the Option and Section 1 of the November 23rd
Amendment, the Borrower is obligated to reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of shares
upon the full exercise of the Option, after the Additional Authorization Date;

 

WHEREAS, pursuant to Section 6 of the Warrant and Section 1 of the November 23rd
Amendment, the Borrower is obligated to reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of shares
upon the full conversion of the Warrant, after the Additional Authorization
Date;

 

 

 

 

 

 

 

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WHEREAS, the Borrower entered into a securities purchase agreement with Laurus
on June 30, 2005 (the “Securities Purchase Agreement”) to set forth, among other
things, the terms of the issuance of the Note, the Option and the Warrant;

 

WHEREAS, pursuant to Section 4.3(d) of the Securities Purchase Agreement and
Section 1 of the November 23rd Amendment, the Borrower is obligated to reserve
from its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of shares upon the full conversion and/or exercise of
the Note, the Warrant and the Option, after the Additional Authorization Date;

 

WHEREAS, Laurus has agreed to extend the Additional Authorization Date to the
earlier of (x) March 1, 2006 and (y) the date of the Borrower’s next
shareholders’ meeting;

 

WHEREAS, the Borrower entered into a registration rights agreement with Laurus
on June 30, 2005 (the “Registration Rights Agreement”) in order to set forth
Borrower’s obligations to register the shares of Common Stock underlying the
Note, the Option and the Warrant with the Securities and Exchange Commission;

 

WHEREAS, Laurus has agreed to extend the deadline for the Borrower to have its
Registration Statement declared effective under the Registration Rights
Agreement until March 1, 2006;

 

WHEREAS, pursuant to Section 2(b) of the Registration Rights Agreement and
Section 2 of the November 23rd Amendment, the Borrower is required to pay a
daily amount in cash equal to one-thirtieth (1/30th) of the product of the then
outstanding principal amount of the Note multiplied by the following (the
“Fees”) if the Registration Statement has not been declared effective by the
Securities and Exchange Commission (prior to giving effect to this Amendment and
Fee Waiver Agreement):

 

 

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1.5% for the first 30 day period beginning on February 10, 2006;

 

•

2.0% thereafter; and

 

WHEREAS, Laurus has hereby agreed to postpone the date by which any Fees may
accrue and become payable until March 2, 2006.

 

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

 

1.            Extension of Time for Reservation of Authorized and Unissued
Common Stock. Laurus hereby agrees that the date by which the Borrower must
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of conversion of shares upon full conversion
of the Note, the Warrant and the Option will be the earlier to occur of (x)
March 1, 2006 and (y) the date of the Borrower’s next shareholders’ meeting.
This modification shall apply to the following:

 

 

 

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•

the Note;

 

•

the Option;

 

•

the Warrant; and

 

•

the Securities Purchase Agreement.

 

2.            Extension of Deadline by which the Borrower must have the
Securities and Exchange Commission Declare Effective its Registration Statement.
Laurus hereby agrees to postpone the deadline by which the Borrower must have
the Securities and Exchange Commission declare effective its Registration
Statement from February 10, 2006 until March 1, 2006. This modification shall
apply to the Registration Rights Agreement only.

 

3.            Postponement. Laurus hereby agrees to postpone the date by which
any Fees may accrue and become payable until March 2, 2006.

 

4.            Laurus Representations. Laurus hereby represents and warrants to
the Borrower that Laurus is an “accredited investor” as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act of 1933 and a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act of 1933
and has knowledge and experience in financial and business matters such that it
is capable of evaluating the merits and risks of the investment to be made
hereunder.

 

5.            Borrower Representations. The Borrower hereby represents and
warrants to Laurus that (i) no Event of Default exists on the date hereof, after
giving effect to this Amendment and Fee Waiver Agreement, (ii) on the date
hereof, all representations, warranties and covenants made by the Borrower in
connection with the Loan Documents are true, correct and complete and (iii) on
the date hereof, all of the Borrower’s and its Subsidiaries’ covenant
requirements have been met.

 

6.            From and after the date hereof, all references in the Loan
Documents and in the other Related Agreements to the Post-Closing Letter shall
be deemed to be references to the Post-Closing Letter, as the case may be, as
modified hereby.

 

7.            No Other Amendments. Except as expressly set forth in this
Amendment and Fee Waiver Agreement no other term or provision of any Loan
Document is hereby amended or affected in any way, and the Loan Documents shall
remain in full force and effect after the date hereof.

 

8.            The Borrower understands that the Borrower has an affirmative
obligation to make prompt public disclosure of material agreements and material
amendments to such agreements.

 

9.            Governing Law.  This Amendment and Fee Waiver Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of laws.

 

 

 

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10.          Facsimile Signatures; Counterparts.  This Amendment and Fee Waiver
Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

 

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a sealed
instrument as of the date set forth in the first paragraph hereof.

 

 

WINDSWEPT ENVIRONMENTAL GROUP, INC.

 

 

 

 

 

By:

/s/ Andrew C. Lunetta

 

 

 

Andrew C. Lunetta

 

 

Vice President

 

 

 

 

 

LAURUS MASTER FUND, LTD.

 

 

 

 

 

By:

/s/ David Grin

 

 

Name: David Grin

 

Title: Director

 

 

 

 

 

 

 

 

 

 

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