EXHIBIT 10.01
AMENDMENT AND FEE WAIVER AGREEMENT
----------------------------------
This Amendment and Fee Waiver Agreement dated as of November 23, 2005
(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 November 23, 2005. 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, pursuant to Section 3.7 of the Note, 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) December 31, 2005 and (y) the date of the Borrower's
next shareholder's meeting (the "Additional Authorization Date");
WHEREAS, the Borrower, issued 1,500,000 shares of Common Stock to
Laurus on September 12, 2005 pursuant to its partial exercise of the Option;
WHEREAS, pursuant to Section 6 of the Option, 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, 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;
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, 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) January 31, 2005 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 February 10, 2006;
WHEREAS, pursuant to Section 2(b) of the Registration Rights
Agreement, 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 declared effective by the Securities and Exchange Commission
(prior to giving effect to this Amendment and Fee Waiver Agreement):
o 1.5% for the first 30 day period beginning on November 23, 2005;
o 2.0% thereafter; and
WHEREAS, Laurus has hereby agreed to waive the Fees accruing on
November 23, 2005 and to postpone the date by which any Fees may accrue and
become payable until February 10, 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
2
Option will be the earlier to occur of (x) January 31, 2005 and (y) the date of
the Borrower's next shareholders' meeting. This modification shall apply to the
following:
o the Note;
o the Option;
o the Warrant; and
o 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 November 22, 2005 until February 10, 2006. This modification
shall apply to the Registration Rights Agreement only.
3. Waiver of Monetary Penalties and Postponement. Laurus hereby agrees
to waive the Fees relating to the lack of effectiveness of the Registration
Statement on November 23, 2005 and to postpone the date by which any other Fees
may accrue and become payable until February 10, 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.
3
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.
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.
4
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/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
Vice President
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Grin
----------------------------
Name: Xxxxx Grin
Title: Director
5
