OMNIBUS AMENDMENT TO WARRANT, WAIVER TO NOTE AND LOCKUP AGREEMENT

This Omnibus Amendment to Warrant, Waiver to Note and Lockup Agreement (this
“Amendment”), dated March 31, 2008, by and between Windswept Environmental
Group, Inc., a Delaware corporation (the “Company”), Laurus Master Fund, Ltd., a
Cayman Islands company (“Laurus”), Valens Offshore SPV I, Ltd., a Cayman Islands
company (“VOF”), Valens U.S. SPV I, LLC, a Delaware limited liability company
(“VUS” and together with Laurus and VOF, the “Holders” and each, a “Holder”),
PSource Structured Debt Limited (“PSource”) and LV Administrative Services, Inc.
as agent (the “Agent”) for the benefit of each of the Holders, amends (i) that
certain Amended and Restated Secured Convertible Term Note, dated as of
September 29, 2006 and issued by the Company to Laurus, and subsequently
assigned in part by Laurus to VOF and VUS (as amended, modified or supplemented
from time to time, the “Note”) and (ii) that certain Common Stock Purchase
Warrant, issued as of June 30, 2005 by the Company to Laurus, and subsequently
assigned by Laurus in full to PSource and VUS (as amended, modified or
supplemented from time to time, the “Warrant”); which Warrant was exercisable at
the time of original issuance into up to 13,750,000 shares of Common Stock of
the Company. Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Securities Purchase Agreement, dated as
of June 30, 2005 by and between the Company and Laurus (as amended, modified or
supplemented from time to time, the “Purchase Agreement”) and the Related
Agreements referred to in the Purchase Agreement (the “Related Agreements” and
together with the Purchase Agreement, the “Loan Documents”).
 
PREAMBLE

WHEREAS, the Company and the Holders have agreed to postpone certain payments
due under the Note on the terms and conditions as set forth herein;
 
WHEREAS, the Company, PSource and VUS have agreed to make certain changes to the
Warrant on the terms and conditions as set forth herein;
 
WHEREAS, PSource and VUS have agreed to restrict their sale of shares of Common
Stock of the Company issuable upon exercise of the Warrant on the terms and
conditions as set forth herein.
 
NOW, THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
 
Waiver
 
1. Notwithstanding the terms and conditions of that certain waiver dated as of
February 29, 2008 by and among the Company, Laurus, VOF and VUS (the “Existing
Waiver”), which Existing Waiver is hereby superceded in all respect in its
entirety by the terms set forth in this Section 1, the Holders hereby waive
payment of the Monthly Amount due under the Note on March 1, 2008 and April 1,
2008 (the “Deferred Amount”). The Deferred Amount shall be paid by the Company
in full by no later than April 30, 2008. Furthermore, Holders hereby waive
payment of $50,000 of the Monthly Amount due under the Note on May 1, 2008 (the
“May Deferred Amount”). The May Deferred Amount shall be paid by the Company in
full by no later than May 31, 2008. The Deferred Amount may be paid via issuance
of Common Stock of the Company to the extent such issuance is otherwise
permitted under the terms of the Note.
 

 
 

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Amendment to Warrant
 
2. The Warrant is hereby amended by extending the “Expiration Date” as defined
in the first paragraph of the Warrant from “June 30, 2012” to “June 30, 2022”.
 
Lock-up Agreement
 
3. In consideration of the amendment to the Warrant as set forth in Section 2
above, each of PSource and VUS hereby agrees that, for the period commencing on
the date hereof and ending on the three month anniversary of the date hereof, it
shall not (i) sell, offer to sell, contract to sell, grant any option to
purchase or otherwise transfer or dispose of, pledge, hypothecate or otherwise
transfer, directly or indirectly, any shares of Common Stock underlying the
Warrant (collectively, the “Warrant Shares”), (ii) establish or increase a put
equivalent position or liquidate or decrease a call equivalent position (within
the meaning of the Securities Exchange Act of 1934, as amended, or the rules and
regulations of the Securities Exchange Commission promulgated thereunder) with
respect to any Warrant Shares, (iii) enter into any swap or other arrangement
that transfers to another person or entity, in whole or in part, any of the
economic consequences of ownership of any Warrant Shares, whether such
transaction is to be settled by delivery of Warrant Shares or such other
securities, in cash or otherwise, or (iv) publicly announce any intention to
effect any transaction specified in clause (i), (ii) or (iii) above.
Notwithstanding anything contained herein to the contrary, the foregoing
restrictions in this Section 3: (a)shall not be applicable nor have any further
force or effect (i) following the occurrence and during the continuance of an
Event of Default under and as defined in the Note or (ii) in the event the
Company shall effect a reorganization, consolidate with or merge into any other
entity or transfer all or substantially all of its properties or assets and (b)
shall not apply to transfers in a private transaction including, without
limitation, as a bona fide gift or gifts, provided that the transferee thereof
agrees to be bound in writing by the restrictions set forth herein.
 
Miscellaneous
 
4. The amendments and the lockup 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, the Holders, PSource and the Agent shall have duly executed this
Amendment and the Company shall have delivered to the Agent its respective
counterpart to this Amendment.
 

 
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5. Except as specifically set forth in this Amendment or as previously agreed in
writing by the appropriate parties, there are no other amendments, modifications
or waivers to the Loan Documents, and all other forms, terms and provisions of
the Loan Documents remain in full force and effect.
 
6. 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 days of the date hereof and in the
form otherwise prescribed by the SEC.
 
7. The Company hereby represents and warrants to the Holders that (i) after
giving effect to this Amendment, no Event of Default (as defined in the Loan
Documents) exist on the date hereof, (ii) on the date hereof, all
representations, warranties made by the Company in connection with the Loan
Documents continue to be true, correct and complete as of the first date given
and (iii) on the date hereof, all of the Company’s and its Subsidiaries’
covenant requirements have been met.
 
8. 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.
 
[signature page follows]
 

 
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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:
 
HOLDERS:
     
Windswept Environmental Group, Inc.
 
Laurus Master Fund, Ltd.
By: Laurus Capital Management, LLC, its investment manager
           
By:
/s/ Michael O’Reilly
 
By:
/s/ Scott Bluestein
Name:
Michael O’Reilly
 
Name:
Scott Bluestein
Title:
President/CEO
 
Title:
Authorized Signatory

 

 
Valens Offshore SPV I, Ltd.
By: Valens Capital Management, LLC, its investment manager
         
By:
/s/ Scott Bluestein
 
Name:
Scott Bluestein
 
Title:
Authorized Signatory

 

 
Valens U.S. SPV I, LLC
By: Valens Capital Management, LLC, its investment manager
         
By:
/s/ Scott Bluestein
 
Name:
Scott Bluestein
 
Title:
Authorized Signatory

 
 

 
PSOURCE:
PSource Structured Debt Limited
         
By:
/s/ Scott Bluestein
 
Name:
Scott Bluestein
 
Title:
Authorized Signatory

 
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AGENT:
 
LV Administrative Service, Inc. as Agent
         
By:
/s/ Scott Bluestein
 
Name:
Scott Bluestein
 
Title:
Authorized Signatory

 

AGREED AND ACKNOWLEDGED:
         TRADE-WINDS ENVIRONMENTAL RESTORATION INC.                
By:
/s/ Michael O’Reilly
   
Name:
Michael O’Reilly
   
Title:
President/CEO
 

NORTH ATLANTIC LABORATORIES, INC.
         
By:
/s/ Michael O’Reilly
 
Name:
Michael O’Reilly
 
Title:
President/CEO
 

 
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