OMNIBUS AMENDMENT
This Omnibus Amendment, dated September 29, 2006, by and between Windswept
Environmental Group, Inc., a Delaware corporation (the "Company") and Laurus
Master Fund, Ltd., a Cayman Islands company (the "Purchaser") (this Agreement").
PREAMBLE
WHEREAS, Reference is hereby made to each of the (i) Securities Purchase
Agreement, dated June 30, 2005, between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the "Purchase Agreement");
(ii) Secured Convertible Term Note dated June 30, 2005, issued by the Company in
favor of Purchaser, in the aggregate principal amount of $5,000,000.00 (as
amended, modified or supplemented from time to time, the "Note"); (iii) Option
Agreement (as amended, modified or supplemented from time to time, the
"Option"), dated June 30, 2005, between the Purchaser and the Company granting
Purchaser the right to purchase 30,395,179 shares of the Company's common stock,
par value $0.0001 per share (the "Common Stock") at an exercise price of $.0001
per share (iv) Common Stock Purchase Warrant (as amended, modified or
supplemented from time to time, the "Warrant"), dated June 30, 2005, issued by
the Company to Purchaser granting Purchaser the right to purchase 13,750,000
shares of the Common Stock; (v) Master Security Agreement (as amended, modified
or supplemented from time to time, the "Security Agreement"), dated June 30,
2005, by and among the Purchaser, the Company and its wholly owned subsidiaries,
Trade-Winds Environmental Restoration Inc., a New York corporation
("Trade-Winds"), and North Atlantic Laboratories, Inc. a New York corporation
("North Atlantic" and together with Trade-Winds, the "Subsidiaries"); (vi) Funds
Escrow Agreement (the "Escrow Agreement"), dated June 30, 2005, by and among the
Purchaser, the Company and Loeb & Loeb LLP; (vii) Registration Rights Agreement
dated June 30, 2005, by and between the Purchaser and the Company (as amended,
modified or supplemented from time to time, the "Registration Rights
Agreement"); (viii) Stock Pledge Agreement dated June 30, 2005, by and among the
Purchaser, the Company and the Subsidiaries (as amended, modified or
supplemented from time to time, the "Pledge Agreement"); and (ix) the Guaranty
dated June 30, 2005 issued by Xxxxxxx X'Xxxxxx to the Purchaser (as amended,
modified or supplemented from time to time, the "O'Reilly Guaranty").
WHEREAS, each of the Purchaser, the Company, and its Subsidiaries, as
applicable, desire to amend the Purchase Agreement and certain of the Related
Agreements as set forth herein.
NOW, THEREFORE, in consideration of the covenants, agreements and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Capitalized terms used herein without definition are used as defined in
the Purchase Agreement and Related Agreements, respectively. The Purchase
Agreement and Related Agreements are collectively referred to herein as (the
"Loan Documents").
2. Effective as of the Amendment Effective Date (as defined below), the
Note is hereby amended and restated in the form attached hereto as Exhibit A
(the "Amended and Restated Note"). For the avoidance of doubt, (i) the amendment
and restatement of the Note as set forth in this Section 2 shall be in
substitution for and not in satisfaction of the Note and (ii) payment of
principal otherwise due and payable under the Note on each of July 1, 2006,
August 1, 2006 and September 1, 2006 shall be deferred until the Maturity Date
of the Amended and Restated Note.
3. The Purchase Agreement is hereby amended to (i) delete the last sentence
of Section 7.3 thereof and (ii) to add the following Section 7.4 immediately
following the last sentence of Section 7.3:
"7.4 The Purchaser covenants and agrees that it will not at any time take
or attempt to take a seat on the Board of Directors or the management of the
Company nor shall it engage in any action that would attempt to unfairly
influence or interfere with the internal management and/or policies of the
Company ."
4. The Registration Rights Agreement is hereby amended to delete Section
2(b) thereof in its entirety, as of September 20, 2006, and to insert the
following in its stead:
"(b) Notwithstanding anything contained herein to the contrary, the Company
shall file a Registration Statement covering an aggregate of 5,395,061 shares of
Common Stock (or, if different, such other number of shares of Common Stock
actually permitted by the SEC to be registered on the December 2006 Registration
Statement) on or prior to December 15, 2006 (the "December 2006 Registration
Statement") which Registration Statement shall be declared effective no later
than February 15, 2007."
5. The Registration Rights Agreement is hereby amended to delete the
defined term "Filing Date" contained therein and in its stead, to insert the
following:
""Filing Date" means with respect to the Registration Statement required to
be filed with the SEC in respect of 5,395,061 shares of Common Stock, December
15, 2006. For the avoidance of doubt, the Holder may demand that the Company
file a Registration Statement, or such number of Registration Statements as
shall be necessary to register any Registrable Securities not otherwise
registered on the December 2006 Registration Statement within 45 days after
written request from the Holder to do so. The forty-fifth (45th) day following
each such written request shall be deemed a Filing Date, provided, however, that
the Company shall only be required to register any such shares of Common Stock
if permitted by the SEC to be registered."
6. The Registration Rights Agreement is hereby amended to delete the
defined term "Effectiveness Date" contained therein and in its stead, to insert
the following:
"Effectiveness Date" means (i) with respect to the December 2006
Registration Statement, a date no later than February 15, 2007 and (ii) with
respect to each additional Registration Statement required to be filed
hereunder, a date no later than sixty (60) days following the applicable Filing
Date."
7. The Registration Rights Agreement is hereby amended to delete the
defined term "Registrable Securities" contained therein and in its stead, to
insert the following:
"Registrable Securities" means the shares of Common Stock (i) issuable upon
the conversion of the Convertible Amount (as such term is defined in) the
Amended and Restated Note, (ii) issuable upon exercise of the Option; (iii)
issuable upon exercise of the Warrants; (iv) issuable upon the exercise of that
certain Option to purchase up to 11,145,000 shares of the Company's Common Stock
issued to the Purchaser on September 29, 2006; and (v) sold, granted, or
otherwise issued by the Company to Laurus after September 29, 2006 or issuable
to Laurus upon the exercise, conversion or exchange of any other options,
warrants, convertible securities or exchangeable securities acquired by Laurus
from the Company after September 29, 2006."
8. The Warrant is hereby amended to delete the reference to the 4.99%
contained in Section 10 thereof and in its stead to insert "9.99%."
9. The Option is hereby amended to delete to delete the reference to the
4.99% contained in Section 1.1 thereof and in its stead to insert "9.99%."
10. In connection with the consummation of the transactions contemplated
hereby, on the date hereof, the Company will issue an option to purchase up to
11,145,000 shares of its Common Stock to the Purchaser, in the form attached
hereto as Exhibit B (the "September 2006 Option"). Laurus verifies that the
---------
investor representations made in Section 3 of the Amendment and Fee Waiver
Agreement, dated August 25, 2006, between the parties hereto, remain accurate
and that it is purchasing the September 2006 Option for investment purposes.
11. In connection with the consummation of the transactions contemplated
hereby, on the date hereof the Purchaser shall execute and deliver a proxy to
either the Company or an unrelated third party in such form as the parties shall
mutually agree.
12. The Purchaser hereby agrees, that upon the date that the Company shall
have irrevocably repaid or the Purchaser shall have converted, on and after the
date hereof, an aggregate of $1,842,175 of the outstanding principal balance of
the Amended and Restated Note in cash or other immediately available funds, the
Purchaser shall be deemed to release Xxxxxxx X'Xxxxxx from the O'Reilly Guaranty
without further action by any party hereto.
13. The Company shall reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of all of the shares
of Common Stock issuable upon (i) the conversion of the Convertible Amount under
the Amended and Restated Note, (ii) the exercise of the Warrant, (iii) the
exercise of the Option and (iv) the exercise of the September 2006 Option. The
Company represents that upon issuance, such shares of Common Stock will be duly
and validly issued, fully paid and non-assessable.
14. The Company understands that it has an affirmative obligation to make
prompt public disclosure of material agreements and material amendments to such
agreements. It is the Company's determination that this Amendment is material.
The Company agrees to file an 8-K within 4 business days of the date hereof and
in the form otherwise prescribed by the SEC.
15. The amendments set forth above shall be effective as of the date first
above written (the "Amendment Effective Date") on the date when each of the
Company and the Purchaser shall have executed and the Company shall have
delivered to Purchaser its respective counterpart to this Amendment.
16. Except as specifically set forth in this Amendment, there are no other
amendments, modifications or waivers to the Loan Documents, and all of the other
forms, terms and provisions of the Loan Documents remain in full force and
effect.
17. The Company hereby represents and warrants to the Purchaser that (i) no
Event of Default (as defined in the Amended and Restated Note) exists on the
date hereof, (ii) on the date hereof, all representations, warranties and
covenants made by the Company in connection with the Loan Documents were true,
correct and complete when made and (iii) on the date hereof, all of the
Company's and its Subsidiaries' covenant requirements have been met.
18. From and after the Amendment Effective Date, all references in the Loan
Documents shall be deemed to be references to the Loan Documents, as the case
may be, as modified hereby.
19. This Amendment shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
and be enforceable by each of the parties hereto and their respective successors
and permitted assigns. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument.
20. This Amendment supersedes, as of the date hereof, the terms of the
several Amendment and Fee Waiver Agreements entered into by the parties hereto.
[signature page follows]
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment
or has caused this Amendment to be executed on its behalf by a representative
duly authorized, all as of the date first above set forth.
COMPANY: PURCHASER:
WINDSWEPT ENVIRONMENTAL GROUP, INC. LAURUS MASTER FUND, LTD.
By: /s/Xxxxxxx X'Xxxxxx By: /s/Xxxxxx Grin
---------------------------- ----------------------------
Name: Xxxxxxx X'Xxxxxx Name: Xxxxxx Grin
---------------------------- ----------------------------
Title: President Title: Director
---------------------------- ----------------------------
With respect to Section 12 only:
/s/Xxxxxxx X'Xxxxxx
-------------------------------
Xxxxxxx X'Xxxxxx
