Document:

EXHIBIT
      10.1

    
      OMNIBUS
        AMENDMENT 

      

      This
        Omnibus Amendment (this “Amendment”),
        dated
        as of September 2, 2008, by and between Windswept Environmental Group, Inc.,
        a
        Delaware corporation (the “Company”),
        Valens Offshore SPV I, Ltd., a Cayman Islands company (“VOFSPVI”),
        PSource Structured Debt Limited, a Guernsey company (“PSource”),
        Valens U.S. SPV I, LLC, a Delaware limited liability company (“VUSSPVI”
and
        together with PSource and VOFSPVI, the “Holders”
and
        each, a “Holder”)
        and LV
        Administrative Services, Inc. as agent (the “Agent”)
        for
        the benefit of each of the Holders, amends that certain Amended and Restated
        Secured Convertible Term Note, dated as of September 29, 2006, issued by
        the
        Company to Laurus Master Fund, Ltd., a Cayman Islands company (“Laurus”),
        and
        subsequently assigned in full by Laurus to VOFSPVI, PSource and VUSSPVI (as
        previously, and as maybe, amended, modified, or supplemented from time to
        time,
        the “September
        2006 Convertible Note”).
        Capitalized terms used but not defined herein shall have the meanings ascribed
        to such terms in the September 2006 Convertible Note. Reference is also made
        to
        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
        together with the September 2006 Convertible Note and the Related Agreements
        as
        defined in the Purchase Agreement, the “Loan
        Documents”).

       

      PREAMBLE

      

      WHEREAS,
        the
        Company and Holders, as applicable, have agreed to make certain changes to
        the
        September 2006 Convertible Note as set forth herein; and

       

      WHEREAS,
        the Company and Holders, as applicable, agree that since the issuance of
        the
        September 2006 Convertible Note, the Company is past due on the following:
        (i)
        the principal portion of certain Monthly Amounts occurring prior to the
        Amendment Effective Date (the aggregate of all such unpaid principal, the
        “Pastdue
        Principal”),
        and
        (ii) certain regularly scheduled payments of interest on the Principal Amount
        (the aggregate of all such unpaid interest, the “Pastdue
        Interest”,
        and
        together with the Pastdue Principal, “Pastdue
        Amounts”);
        

       

      WHEREAS,
        the
        Company has agreed to make certain payments 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:

       

      1. Each
        of
        VOFSPVI, PSource, VUSSPVI and the Company consent to the deferral of the
        Monthly
        Amount (i.e. $100,000.00) under the September 2006 Convertible Note otherwise
        due on September 2, 2008 (the “Deferred
        Amount”)
        on the
        terms, and subject to the conditions, set forth herein. 

       

      2. The
        Company hereby covenants and agrees that the Deferred Amount and the Pastdue
        Amounts equaling $19,041.83 shall be payable in full on the earlier of (i)
        the
        date that the Company receives any payment resulting from or pertaining to
        any
        past or current litigation involving the Company or (ii) November 1, 2008.
        

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      3. From
        and
        after October 1, 2008, regularly scheduled amortizing Monthly Amounts required
        pursuant to the terms of the September 2006 Convertible Note will be due
        and
        payable per the terms and on the date set forth in the September 2006
        Convertible Note. 

       

      4. In
        consideration of the Holders agreement to the transactions contemplated hereby,
        and for other good and valuable consideration, the receipt and sufficiency
        of
        which are hereby acknowledged, the Company hereby agrees to pay to the Holders
        the aggregate sum of $35,000.00 as additional interest (“Additional
        Interest”)
        with
        respect to the outstanding principal amount evidenced by the September 2006
        Convertible Note. The
        Additional Interest shall be deemed fully earned on the date hereof and shall
        be
        paid ratably to the Holders of the September 2006 Convertible Note ($5,179.62
        to
        VOFSPVI, $1,365.43 to VUSSPVI, $28,454.96 to PSource), at such time as the
        Company is required to repay all of the outstanding principal balance evidenced
        by the September 2006 Convertible Note, whether at the Maturity Date, upon
        acceleration, prepayment or otherwise. The parties hereby agree that the
        fair
        market value of the Additional Interest (as reasonably determined by the
        parties) received by the Holders in consideration of the amendments herein
        made
        by the Holders hereunder is hereby designated as additional interest. The
        parties hereto further agree to file all applicable tax returns in accordance
        with such characterizations set forth above, treating each obligation to
        each
        Holder as a separate obligation, and shall not take a position on any tax
        return
        or in any judicial or administrative proceeding that is inconsistent with
        such
        characterization. Notwithstanding the foregoing, nothing contained in this
        paragraph shall, or shall be deemed to, modify or impair in any manner
        whatsoever the Company’s obligations from time to time owing to the Holders
        under the Loan Documents.

       

      5. The
        Company hereby further consents and agrees to provide the Agent, no later
        than
        September 15, 2008, with written documentation indicating the hiring of an
        advisor to help the Company pursue strategic alternatives, including but
        not
        limited to, a potential sale of the Company.

      

      6. The
        amendments set forth above shall be effective as of the date first above
        written
        (the “Amendment
        Effective Date”)
        if
        each of the Company, the Holders and the Agent shall have duly executed this
        Amendment and the Company shall have delivered to the Agent its respective
        counterpart to this Amendment.

       

      7. Except
        as
        specifically set forth in this Amendment or as previously agreed to 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.

       

      8. 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)
        exists on the date hereof, (ii) on the date hereof, after giving effect to
        this
        Amendment, all representations and warranties made by the Company in connection
        with the Loan Documents, as amended, modified or supplemented continues to
        be
        true, correct and complete as of the first date given and (iii) on the date
        hereof, after giving effect to this Amendment, all of the Company’s and its
        Subsidiaries’ covenant requirements have been met.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

         

      

      9. 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]

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      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.

              	 	
                Valens
                  Offshore SPV I, Ltd.

                By:
                  Valens Capital Management, LLC,

                its
                  investment manager

              
	 	 	 
	
                By:

              	
                 
                  /s/ Michael O’Reilly

              	 	
                By:

              	
                 
                  /s/ Scott Bluestein

              
	
                Name:

              	
                 
                  Michael O’Reilly

              	 	
                Name:

              	
                 
                  Scott Bluestein

              
	
                Title:

              	
                 
                  President

              	 	
                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
                  STRUCTURED DEBT LIMITED

              
	 
	
                By:

              	
                 
                  /s/ Soondra Appavoo

              
	
                Name:

              	
                 
                  Soondra Appavoo

              
	
                Title:

              	
                 
                  Managing Director, PSource Capital

                Limited,
                  its Investment Consultant

              

      

       

      
        	AGENT: 
	 
	
                LV
                  Administrative Service, Inc. as Agent

              
	 
	
                By:

              	
                 
                  /s/ Scott Bluestein

              
	
                Name:

              	
                 
                  Scott Bluestein

              
	
                Title:

              	
                 
                  Authorized Signatory

              

      

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      
        	
                AGREED
                  AND ACKNOWLEDGED:

              
	 
	
                TRADE-WINDS
                  ENVIRONMENTAL

                RESTORATION
                  INC.

              
	 
	
                By:

              	
                 
                  /s/ Michael O’Reilly

              
	
                Name:

              	
                 
                  Michael O’Reilly

              
	
                Title:

              	
                 
                  President

              

      

      

      
        	
                NORTH
                  ATLANTIC LABORATORIES, INC.

              
	 
	
                By:

              	
                 
                  /s/ Michael O’Reilly

              
	
                Name:

              	
                 
                  Michael O’Reilly

              
	
                Title:

              	
                 
                  President

              

      

      

      
        	
                ENVIRONMENTAL
                  RESTORATION, INC.

              
	 
	
                By:

              	
                 
                  /s/ Michael O’Reilly

              
	
                Name:

              	
                 
                  Michael O’Reilly

              
	
                Title:

              	
                  President

              

      

      

      
        	
                RESTORENET,
                  INC.

              
	 
	
                By:

              	
                 
                  /s/ Michael O’Reilly

              
	
                Name:

              	
                 
                  Michael O’Reilly

              
	
                Title:

              	
                 
                  President

              

      

      

      
        
           

        

        
          5EXHIBIT
      10.2

     

    LETTER
      AGREEMENT

     

    September
      3, 2008

     

    Valens
      U.S. SPV I, LLC

    Valens
      Offshore SPV I, Ltd.

    PSource
      Structured Debt Limited

    LV
      Administrative Services, Inc., as agent

    c/o
      Valens Capital Management, LLC

    335
      Madison Avenue, 10th
      Floor

    New
      York,
      New York 10017

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to (a) the Securities Purchase Agreement, dated as of June 30, 2005
      (as
      amended, restated, modified and/or supplemented from time to time, the
“Purchase
      Agreement”),
      by
      and among WINDSWEPT ENVIRONMENTAL GROUP, INC., a Delaware corporation
      (“Company”),
      VALENS U.S. SPV I, LLC, a Delaware limited liability company (“Valens
      U.S.”),
      as
      assignee of Laurus Master Fund, Ltd. (“Laurus”),
      VALENS
      OFFSHORE SPV I, LTD.,
      a
      Cayman Islands company (“Valens
      Offshore”),
      as
      assignee of Laurus, and PSOURCE
      STRUCTURED DEBT LIMITED,
      a
      Guernsey company (“PSource”
and,
      together with Valens U.S. and Valens Offshore as assignees of Laurus Master
      Fund, Ltd., collectively, the “Purchasers”),
      as
      assignee of Laurus, (b) the Second Amended and Restated Secured Term Note,
      dated
      as of April 17, 2007 (as amended, restated, modified and/or supplemented from
      time to time, the “Secured
      Term Note”),
      made
      by the COMPANY
      in favor
      of the PURCHASERS,
      as
      assignees of Laurus, (c) the Amended and Restated Secured Convertible Term
      Note,
      dated as of October 6, 2005 (as amended, restated, modified and/or supplemented
      from time to time, the “Secured
      Convertible Term Note”
and,
      together with the Secured Term Note, the “Existing
      Notes”),
      made
      by the COMPANY
      in favor
      of the PURCHASERS,
      as
      assignees of Laurus, (d) the Master Security Agreement, dated as of June 30,
      2005, among the COMPANY,
      TRADE-WINDS ENVIRONMENTAL GROUP, INC.
      (“Tradewinds”),
      NORTH
      ATLANTIC LABORATORIES, INC.
      (“North
      Atlantic”),
      ENVIRONMENTAL
      RESTORATION, INC.
      (“Environmental
      Restoration, Inc.”)
      and
RESTORENET,
      INC.
      (“Restorenet”
and,
      together with Tradewinds, North Atlantic, Environmental Restoration,
      collectively, the “Subsidiaries”)
      and
      the PURCHASERS,
      as
      assignees of Laurus (as
      amended, restated, modified and/or supplemented from time to time, the
“Security
      Agreement”),
      (e)
      the Subsidiary Guaranty, dated as of June 30, 2005, by the Subsidiaries in
      favor
      of the Purchasers, as assignees of Laurus (as amended, modified or supplemented
      from time to time, the “Guaranty”),
      and
      (f) the Reaffirmation and Ratification Agreements, dated as of January 12,
      2007,
      April 17, 2007 and July 17, 2007, by the Company, Trade-Winds and North Atlantic
      (as amended, restated, modified and/or supplemented from time to time the
“Reaffirmation
      Agreements”
and,
      together with the Purchase Agreement, the Existing Notes, the Security
      Agreement, the Guaranty and all other ancillary documents, instruments and
      agreements executed in connection therewith, each an “Existing
      Agreement”
and
      collectively, the “Existing
      Agreements).
      Defined terms used in this letter agreement (the “Letter
      Agreement”)
      but
      not otherwise defined in this Letter Agreement shall have the meanings ascribed
      to those terms in the Purchase Agreement.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    To
      induce
      Purchasers to, among other things, continue to provide financial accommodations
      to the Companies and, more specifically, to agree to the terms of (a) the Demand
      Note, dated as of the date hereof, in the principal amount of $9,948 in favor
      of
      Valens U.S., (b) the Demand Note, dated as of the date hereof, in the principal
      amount of $37,737 in favor of Valens Offshore and (c) the Demand Note, dated
      as
      of the date hereof, in the principal amount of $207,315 in favor of PSource
      (collectively, the “Demand
      Notes”),
      each
      of the undersigned (other than the Purchasers and Agent) hereby: 

     

    (a) acknowledges,
      ratifies and confirms that the Purchasers have made several term loans to the
      Company (the “Original
      Term Loans”)
      and
      such Original Term Loans are evidenced by the Existing Notes;

     

    (b) acknowledges,
      ratifies and confirms that, as of the date hereof, the aggregate outstanding
      principal amount of the Original Term Loans is $6,320,028.14;

     

    (c) acknowledges,
      ratifies and confirms that on the date hereof (the “Closing
      Date”),
      subject to the terms and conditions set forth herein and in the New Agreements
      (as defined below), the Purchasers shall make an additional advance to the
      Company in an aggregate amount equal to Two Hundred and Fifty Thousand Dollars
      ($250,000) (the “Additional
      Advances”).
      The
      Additional Advances shall be evidenced by the Demand Notes. Each of the Company
      and the Subsidiaries (collectively, the “Security
      Parties”)
      hereby
      acknowledge and agree that the Purchasers’ obligation to purchase the Demand
      Notes on the Closing Date shall be contingent upon the satisfaction (or waiver
      by LV Administrative Services, Inc., as agent for the Purchasers, the
“Agent”)
      of the
      items and matters set forth in the closing checklist provided by the Agent
      to
      the Security Parties on or prior to the Closing Date;

     

    (d) acknowledges,
      ratifies and confirms that in consideration of the Purchasers’ agreement to make
      the Additional Advance, (i) the Company shall issue the Demand Notes to the
      Purchasers and (ii) the Company shall pay to Valens Capital Management, LLC,
      the
      investment manager of the Purchasers (“VCM”),
      a
      non-refundable payment in an amount equal to Three Thousand Seven Hundred Fifty
      Dollars ($3,750), plus reasonable expenses (including legal fees and expenses)
      incurred in connection with the entering into of this Letter Agreement and
      the
      ancillary documents, and expenses incurred in connection with VCM’s due
      diligence review of the Company and its Subsidiaries) and all related matters.
      Each of the foregoing payments in clause (ii) above shall be deemed fully earned
      on the Closing Date and shall not be subject to rebate or proration for any
      reason. 

     

    (e) represents
      and warrants to the Agent and the Purchasers that it has reviewed and approved
      the terms and provisions of the Demand Notes, this Letter Agreement, the
      Guaranty by Michael O’Reilly (“Principal”)
      in
      favor of the Purchasers and Agent, dated as of the date hereof (as amended,
      restated, modified and/or supplemented from time to time, the “Individual
      Guaranty”)
      and
      all documents, instruments and agreements executed in connection herewith and
      therewith (together the “New
      Agreements);

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (f) acknowledges,
      ratifies and confirms that all of the terms, conditions, representations and
      covenants contained in the Existing Agreements to which it is a party are in
      full force and effect and shall remain in full force and effect after giving
      effect to the execution and effectiveness of the New Agreements;

     

    (g) acknowledges,
      ratifies and confirms that the defined term “Obligations” under each of the
      Purchase Agreement and the Related Agreements include, without limitation,
      all
      obligations and liabilities of the Security Parties under the New Agreements
      and
      the Existing Agreements, as applicable, and all other obligations and
      liabilities of each of the undersigned to each Purchaser and Agent (including
      interest accruing after the filing of any petition in bankruptcy, or the
      commencement of any insolvency, reorganization or like proceeding, whether
      or
      not a claim for post-filing or post-petition interest is allowed or allowable
      in
      such proceeding), whether now existing or hereafter arising, direct or indirect,
      liquidated or unliquidated, absolute or contingent (collectively, the
“Obligations”);

     

    (h) acknowledges,
      ratifies and confirms that the New Agreements (i) are “Documents” under, and as
      defined in, the Security Agreement and the Guaranty and (ii) “Related
      Agreements” under, and as defined in, the Purchase Agreement.

     

    (i) acknowledges
      and confirms that (i) the occurrence of a breach and/or an Event of Default
      under any of the New Agreements shall constitute a breach and/or an Event of
      Default under the Existing Agreements and (ii) the occurrence of a breach and/or
      an Event of Default under any of the Existing Agreements shall constitute a
      breach and/or an Event of Default under the New Agreements;

     

    (j) represents
      and warrants that no offsets, counterclaims or defenses exist as of the date
      hereof with respect to any of the undersigned’s obligations under any of the
      Existing Agreements;

     

    (k) acknowledges,
      ratifies and confirms (i) that the security interest grants to Laurus set forth
      in the Existing Agreements extend to each Purchaser, as assignees of Laurus,
      and
      to Agent, as agent for each Purchaser, (ii) that the grant by each Security
      Party to the Purchasers and Agent of a security interest under the Existing
      Agreements extends to and covers all assets (including, without limitation,
      the
      equity interests owned by such Security Party) of each Security Party as more
      specifically set forth in the Existing Agreements and the New Agreements, as
      applicable (the “Security
      Interest Grants”),
      (iii)
      that the Security Interest Grants secure all Obligations, and (iv) that each
      Purchaser and Agent have all rights and remedies of a secured creditor under
      the
      Existing Agreements, New Agreement and applicable law. To the extent not
      otherwise granted by the terms of the Existing Agreements, each Security Party
      grants to each Purchaser and Agent, as agent for each Purchaser, a security
      interest in all cash, cash equivalents, accounts, accounts receivable, deposit
      accounts, inventory, equipment, goods, fixtures, documents, instruments
      (including, without limitation, promissory notes and equity securities),
      contract rights, general intangibles (including, without limitation, payment
      intangibles), chattel paper, supporting obligations, investment property,
      letter-of-credit rights, trademarks, trademark applications, tradestyles,
      patents, patent applications, copyrights, copyright applications and other
      intellectual property in which each Security Party now has or hereafter may
      acquire any right, title or interest, all proceeds and products thereof
      (including, without limitation, proceeds of insurance) and all additions,
      accessions and substitutions thereto or therefor; 

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (l) represents
      and warrants that (i) all of the representations made by or on behalf of the
      Security Parties in the Existing Agreements to which it is a party are true
      and
      correct in all material respects on and as of the date hereof; (ii) the Security
      Parties have the corporate power and authority to execute and deliver the New
      Agreements; (iii) all corporate action on the part of the Security Parties
      (including their respective officers and directors) necessary for the
      authorization of the New Agreements, the performance of all obligations of
      the
      Security Parties hereunder and thereunder and, the authorization, sale, issuance
      and delivery of the Demand Notes has been taken; and (iv) the New Agreements,
      when executed and delivered and to the extent it is a party thereto, will be
      valid and binding obligations of the Security Party; and

     

    (m) releases,
      remises, acquits and forever discharges each Purchaser and its respective
      employees, agents, representatives, consultants, attorneys, fiduciaries,
      officers, directors, partners, predecessors, successors and assigns, subsidiary
      corporations, parent corporations, and related corporate divisions (all of
      the
      foregoing hereinafter called the “Released
      Parties”),
      from
      any and all actions and causes of action, judgments, executions, suits, debts,
      claims, demands, liabilities, obligations, damages and expenses of any and
      every
      character, known or unknown, direct and/or indirect, at law or in equity, of
      whatsoever kind or nature, for or because of any matter or things done, omitted
      or suffered to be done by any of the Released Parties prior to and including
      the
      date of execution hereof, and in any way directly or indirectly arising out
      of
      or in any way connected to this Letter Agreement, the Existing Agreements,
      the
      New Agreements and any other document, instrument or agreement made by the
      undersigned in favor of a Purchaser.

     

    Each
      party hereto agrees and acknowledges that the Agent shall maintain, or cause
      to
      be maintained, for this purpose only as agent of the Company, (i) a copy of
      each
      assignment agreement delivered to it and (ii) a book entry system, within the
      meaning of U.S. Treasury Regulation Sections 15f.103-1(c) and 1.871-14(c) (the
      “Register”),
      in
      which it will register the name and address of each Purchaser and the name
      and
      address of each assignee of each Purchaser under this Letter Agreement and
      the
      Purchase Agreement, and the principal amount of, and stated interest on, the
      Existing Notes and Demand Notes owing to each such Purchaser and assignee
      pursuant to the terms hereof and each assignment agreement. The right, title
      and
      interest of the Purchasers and their assignees in and to such Existing Notes
      and
      Demand Notes shall be transferable only upon notation of such transfer in the
      Register, and no assignment thereof shall be effective until recorded therein.
      The Security Parties, the Purchasers and the Agent shall treat each person
      whose
      name is recorded in the Register as a Purchaser pursuant to the terms hereof
      and
      under the Purchase Agreement as a Purchaser and owner of an interest in the
      Obligations hereunder and thereunder for all purposes of this Letter Agreement
      and the Purchase Agreement, notwithstanding notice to the contrary or any
      notation of ownership or other writing or any Note. The Register shall be
      available for inspection by the Security Parties or any Purchaser, at any
      reasonable time and from time to time, upon reasonable prior
      notice.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Principal
      shall deliver to Agent (in the case of the following clause “(a)”, on or prior
      to the execution of this Letter Agreement, and in the case of the following
      clause “(b)”, on or prior to the delivery to Agent of a security agreement in
      form and substance acceptable to Agent covering the vessel referenced in such
      clause “(b)”), in form and substance satisfactory to Agent, endorsements to each
      and every insurance policy (the “Insurance
      Policies”)
      covering (a) the recreational motor vessel DORADO, of about 19 gross and 15
      net
      tons, length about 38.2 feet, built in 1985 at Owings MD and duly documented
      under the laws of the United States with official number 699081 (the
“Dorado”)
      and
      (b) each other vessel owned by Principal, including without limitation the
      New
      York State titled vessel (collectively, with the Dorado, the “Vessels”)
      naming
      Agent, on behalf of the Purchasers, as an additional insured and a lender loss
      payee. Principal irrevocably makes, constitutes and appoints Agent (and all
      officers, employees or agents designated by Agent), so long as the Obligations
      (as defined in the Individual Guaranty) remain outstanding as Principal’s true
      and lawful agent and attorney in fact for the purpose of making, settling and
      adjusting claims under such Insurance Policies, endorsing the name of Principal
      on any check or other item of payment for the proceeds of such Insurance
      Policies and for making all determinations and decisions with respect to such
      Insurance Policies. Agent shall have no duty to exercise any rights or powers
      granted to it pursuant to the foregoing power-of-attorney. Principal shall
      promptly notify Agent of any loss, damage, or destruction to the Vessels,
      whether or not covered by an Insurance Policy. If Principal receives any
      proceeds from such Insurance Policies (the “Proceeds”),
      Principal shall promptly remits such Proceeds to Agent. After deducting from
      such Proceeds the expenses (including reasonable attorneys’ fees) incurred by
      Agent in the collection or handling thereof, Agent may, at its option, make
      such
      remaining Proceeds available to Principal to replace, repair, restore or rebuild
      the Vessel that was damaged or destroyed. If such Vessel is replaced, the
      Principal shall enter into all such documents, instruments and agreements as
      Agent shall require to evidence the grant by Principal to Agent, as agent for
      the Purchasers, of a first priority perfected security interest in such
      replacement vessel. All Proceeds at any time held by Agent which are not
      otherwise made available to Principal hereunder (the “Cash
      Collateral Amount”)
      shall
      be held by Agent as cash collateral to secure the Obligations (as defined in
      the
      Individual Guaranty). Agent, as agent for Purchasers, is hereby granted a
      security interest in the Cash Collateral Amount and Agent is authorized, without
      any prior notice or demand, to debit the Cash Collateral Amount to pay any
      amount due with respect to the Obligations (as defined in the Individual
      Guaranty). Upon the payment in full of the Obligations (as defined in the
      Individual Guaranty), the Agent will remit to Principal (or otherwise as a
      court
      of competent jurisdiction shall direct), the amount, if any, of the Cash
      Collateral Amount then held by the Agent. 

     

    This
      Letter Agreement may be executed in any number of counterparts, each of which
      when so executed shall be deemed to be an original, and all which when taken
      together shall constitute one and the same agreement.

     

    [Remainder
      of this page intentionally left blank.]

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    This
      Letter Agreement shall be governed by and construed in accordance with the
      laws
      of the State of New York.

    

    
      	
              Very
                truly yours,

            
	 
	
              WINDSWEPT
                ENVIRONMENTAL

              GROUP,
                INC., a Delaware corporation

            
	 
	
              By:

            	
              /s/
                Michael O’Reilly

            
	 	
              Name:
                Michael O’Reilly

            
	 	
              Title:
                President

            
	 	 
	
              TRADE-WINDS
                ENVIRONMENTAL

              GROUP,
                INC.,
                a
                New York corporation

            
	 	 
	
              By:

            	
              /s/
                Michael O’Reilly

            
	 	
              Name:
                Michael O’Reilly

            
	 	
              Title:
                President

            
	 	 
	
              NORTH
                ATLANTIC LABORATORIES,

              INC.,
                a
                New York corporation

            
	 	 
	
              By:

            	
              /s/
                Michael O’Reilly

            
	 	
              Name:
                Michael O’Reilly

            
	 	
              Title:
                President

            
	 	 
	
              ENVIRONMENTAL
                RESTORATION,

              INC.,
                a
                New York corporation

            
	 	 
	
              By:

            	
              /s/
                Michael O’Reilly

            
	 	
              Name:
                Michael O’Reilly

            
	 	
              Title:
                President

            
	 	 
	
              RESTORENET,
                INC., a New
                York

              corporation

            
	 	 
	
              By:

            	
              /s/
                Michael O’Reilly

            
	 	
              Name:
                Michael O’Reilly

            
	 	
              Title:
                President

            

    

     

    
      SIGNATURE
        PAGE TO

      LETTER
        AGREEMENT

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              /s/
                Michael O’Reilly

            
	
              Michael
                O’Reilly, Individually

            

    

    

    
      	
              STATE OF New York

            	
              )

            
	 	
              ): ss.:

            
	
              COUNTY OF Suffolk

            	
              )

            

    

     

    On the
      3rd day of September, 2008, before me personally came Michael O’Reilly to me
      known, who being by me duly sworn, did depose and say that he has read the
      foregoing instrument and is fully familiar with the contents thereof; that
      he
      signed his name thereto of his own free will and volition.

    

    
      	
              Mary
                E. Dunn

            
	
              Notary
                Public

            

    

    

    Mary
      E.
      Dunn

    Notary
      Public, State of New York

    No.
      01DU6190448

    Qualified
      In Suffolk County

    Commission
      Expires 07/28/2012

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              ACCEPTED
                AND AGREED TO:

            
	 
	
              AGENT:

            
	 
	
              LV
                ADMINISTRATIVE SERVICES, INC.

            
	 	 
	
              By:
                

            	
              /s/
                Scott Bluestein

            
	 	
              Name:
                Scott Bluestein

            
	 	
              Title:
                Authorized Signatory

            
	 	 
	
              PURCHASERS:

            
	 
	
              VALENS
                U.S. SPV I, LLC

            
	 	 
	
              By:

            	
              Valens
                Capital Management, LLC,

            
	 	
              its
                investment manager

            
	 	 
	 	 
	
              By:
                

            	
              /s/
                Scott Bluestein

            
	 	
              Name:
                Scott Bluestein

            
	 	
              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

            
	 	 
	
              PSOURCE
                STRUCTURED DEBT LIMITED

            
	 	 
	
              By:
                

            	
              /s/
                Soondra Appavoo

            
	 	
              Name:
                Soondra Appavoo

            
	 	
              Title: Managing Director, PSource Capital Limited, its investment manager

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