THIS
      NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”)
      FOR U.S. FEDERAL INCOME TAX PURPOSES. FOR INFORMATION CONCERNING THE ISSUE
      PRICE, THE AMOUNT OF OID, AND THE YIELD TO MATURITY, PLEASE CONTACT MICHAEL
      O’REILLY, PRESIDENT OF THE COMPANY, AT (631) 289-5500 WHO WILL PROMPTLY MAKE
      THIS INFORMATION AVAILABLE UPON REQUEST.

     

    AMENDED
      AND RESTATED DEMAND NOTE

     

    
      	
              $416,581.00

            	
              Dated
                as of September 24, 2008

            
	 	
              New
                York, New York

            


    

     

    FOR
      VALUE
      RECEIVED, Windswept Environmental Group, Inc., a Delaware corporation (the
      “Maker”),
      promises to pay to PSource Structured Debt Limited (the “Payee”),
      ON
      DEMAND,
      at 335
      Madison Avenue, 10th
      Floor,
      New York, New York 10017, or at such other place as may be designated in writing
      by the holder of this Note, the principal sum of FOUR HUNDRED SIXTEEN THOUSAND
      FIVE HUNDRED EIGHTY ONE ($416,581.00) DOLLARS, together with interest on the
      unpaid principal balance computed from the date hereof at 20% per annum, which
      sum shall be payable in lawful money of the United States of America. Interest
      shall be calculated on the basis of the actual number of days elapsed over
      a
      year of 360 days.

     

    1.  DEFAULT
      INTEREST.
      In
      addition to any late payment charge which may be due under this Note, if the
      principal indebtedness is not paid in full when due, the Maker shall thereafter,
      pay interest on the principal sum then remaining unpaid from the due date until
      the date on which the principal sum then outstanding is paid in full (whether
      before or after judgment), at a rate per annum (calculated for the actual number
      of days elapsed on the basis of a 360-day year) equal to the rate initially
      payable hereunder plus 4%; provided,
      however,
      that
      such interest rate shall in no event exceed the maximum interest rate which
      the
      Maker may by law pay.

     

    2.  AUTHORITY.
      The
      Maker (and the undersigned representatives of the Maker, if any) represents
      that
      the Maker has full power, authority and legal right to execute and deliver
      this
      Note, and that this Note constitutes a valid and binding obligation of the
      Maker.

     

    3.  DEFINED
      TERMS.
      Whenever used, the singular number shall include the plural, the plural the
      singular, and the words “Payee”
and
      “Maker”
shall
      include, respectively,
      their
      respective successors and assigns; provided,
      however,
      that
      the Maker shall in no event or under any circumstance have the right to assign
      or transfer its obligations under this Note or the related documents, in whole
      or in part, to any other person, party or entity.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.  HEADINGS,
      ETC.
      The
      headings and captions of the numbered paragraphs of this Note are for
      convenience of reference only and are not to be construed as defining or
      limiting, in any way, the scope or intent of the provisions hereof.


     

    5.  ENFORCEABILITY.
      The
      Maker acknowledges that this Note and the Maker's obligations under this Note
      are and shall at all times continue to be absolute and unconditional in all
      respects, and shall at all times be valid and enforceable irrespective of any
      other agreements or circumstances of any nature whatsoever which might otherwise
      constitute a defense to this Note and the obligations of the Maker under this
      Note or the obligations of any other person or party relating to this Note.
      This
      Note and the instruments and documents referred to herein (collectively and
      as
      the same may be amended or otherwise modified from time to time, the
“Documents”)
      set
      forth the entire agreement and understanding of the Payee and the Maker, and
      the
      Maker absolutely, unconditionally and irrevocably waives any and all right
      to
      assert any set-off, counterclaim or crossclaim of any nature whatsoever with
      respect to this Note or the obligations of the Maker hereunder or thereunder,
      or
      the obligations of any other person or party relating hereto or thereto or
      to
      the obligations of the Maker hereunder or thereunder or otherwise in any action
      or proceeding brought by the Payee to collect the Note, or any portion thereof,
      or to enforce, foreclose and realize upon the liens and security interests
      of
      the Payee in any collateral (provided,
      however,
      that
      the foregoing shall not be deemed a waiver of the Maker's right to assert any
      compulsory counterclaim maintained in a court of the United States, or of the
      State of New York if such counterclaim is compelled under local law or rule
      of
      procedure, nor shall the foregoing be deemed a waiver of the Maker’s right to
      assert any claim which would constitute a defense, setoff, counterclaim or
      crossclaim of any nature whatsoever against the Payee in any separate action
      or
      proceeding). The Maker acknowledges that no oral or other agreements,
      conditions, promises, understandings, representations or warranties exist with
      respect to this Note or with respect to the obligations of the Maker under
      this
      Note, except those specifically set forth in this Note and the instruments
      and
      documents being signed concurrently herewith. 

     

    6.  WAIVER.
      The
      Maker waives presentment, demand for payment, notice of dishonor and any or
      all
      notices or demands in connection with the delivery, acceptance, perfor-mance,
      default or enforcement of this Note and consents to any or all delays,
      extensions of time, renewals, release of any party to any document related
      to
      this Note and of any available security therefor, and any and all waivers or
      modifications that may be granted or consented to by the Payee with regard
      to
      the time of payment or with respect to any other provisions of any of the
      Documents, and agrees that no such action, delay or failure to act on the part
      of the Payee shall be construed as a waiver by the Payee of, or otherwise
      affect, in whole or in part, its right to avail itself of any remedy with
      respect thereto. No notice to or demand on the Maker shall be deemed to be
      a
      waiver of the obligation of the Maker or of the right of the Payee to take
      further action without further notice or demand as provided in any of the
      Documents.

     

    7.  SECURITY
      INTEREST.
      The
      obligations under this Note shall constitute an “Obligation”
as
      such
      term is defined in the Master Security Agreement, dated as of June 30, 2005,
      by
      and among the Maker, Trade-Winds Environmental Restoration Inc., North Atlantic
      Laboratories, Inc., Environmental Restoration, Inc., Restorenet, Inc., Valens
      U.S. SPV I, LLC (as assignee of Laurus), Valens Offshore SPV I, Ltd. (as
      assignee of Laurus) and the Payee (as assignee of Laurus) (as amended, restated,
      modified and/or supplemented from time to time, the “Master
      Security Agreement”)
      and
      shall be secured by liens and the security interests in the Collateral as such
      term is defined in the Master Security Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8.  AMENDMENTS.
      This
      Note may not be modified, amended, changed or terminated orally, except by
      an
      agreement in writing signed by the Maker and the Payee. No waiver of any term,
      covenant or provision of this Note shall be effective unless given in writing
      by
      the Payee and, if so given by the Payee, shall only be effective in the specific
      instance in which given.

     

    9.  GOVERNING
      LAW.
      This
      Note is and shall be deemed entered into in the State of New York and 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.  REGISTERED
      OBLIGATION.
      This
      Note shall be registered (and such registration shall thereafter be maintained)
      as set forth in the Letter Agreement, dated as of the date hereof, by the Maker,
      certain subsidiaries of the Maker, the Payee and certain affiliates of the
      Payee
      (the “Letter
      Agreement”).
      Notwithstanding any document, instrument or agreement relating to this Note
      to
      the contrary, transfer of this Note (or the right to any payments of principal
      or stated interest thereunder) may only be effected by (i) surrender of this
      Note and either the reissuance by the Maker of this Note to the new holder
      or
      the issuance by the Maker of a new instrument to the new holder or (ii)
      registration of such holder as an assignee in accordance with the Letter
      Agreement.

     

    11.  AMENDED
      AND RESTATED NOTE.
      This
      Note amends and restates in its entirety (and is given in substitution for
      an
      not in satisfaction of) the certain Demand Note dated September 18, 2008 in
      the
      original principal amount of $195,445.00 made by the Maker in favor of
      Payee.

     

    





    
      
         

      

      
         

        
          

        

      

      
         

      

    


     

    IN
      WITNESS WHEREOF, the Maker has duly executed this Note the day and year first
      above written.

     

     

    
      	 	 	 
	 	WINDSWEPT
              ENVIRONMENTAL GROUP, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              O’Reilly
	 	
              
Name:
              Michael O’Reilly
	 	
              Title:
                President

            


    

     

     

    


    
      	
              SIGNATURE
                PAGE TO 

              DEMAND
                NOTE