Document:

LETTER
      AGREEMENT

     

    September
      16, 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”),
      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 RESTORATION 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”),
      (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
      (f) the Letter Agreement, dated as of September 3, 2008, by and among the
      Company, Michael O’Reilly, individually, the Subsidiaries, LV Administrative
      Services, Inc., as agent for the Purchasers (“Agent”),
      and
      the Purchasers (as amended, restated, modified and/or supplemented from time
      to
      time, the “Existing
      Letter Agreement”
and,
      together with the Purchase Agreement, the Secured Term Note, the Secured
      Convertible Note, the Notes issued under the Existing Letter Agreement (the
      “Existing
      Demand Notes”
and
      together with the Secured Term Note and the Secured Convertible Term Note,
      collectively, the “Existing
      Notes”),
      the
      Security Agreement, the Guaranty and each other ancillary document, instrument
      and agreement 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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 $4,689.00 in
      favor
      of Valens U.S., (b) the Demand Note, dated as of the date hereof, in the
      principal amount of $17,788.00 in favor of Valens Offshore and (c) the Demand
      Note, dated as of the date hereof, in the principal amount of $97,723.00 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 $6,575,028.14;

     

    (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 ONE HUNDRED TWENTY THOUSAND TWO HUNDRED
      DOLLARS ($120,200) (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 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 One Thousand Six Hundred Fifty
      Dollars ($1,650), 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 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, the New Agreements 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

        
          

        

      

      
         

      

    

     

    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 RESTORATION 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

        

        
          

        

      

      
         

      

    

    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/
      John
      Gilfillan

    
      
        

      

    

    Name: John
      Gilfillan

    Title: Director
      of PSource Capital Limited

              Signing
      for and on Behalf of PSource Structured Debt Limited

     

    
      
         

      

      
        

          SIGNATURE
            PAGE TO

          LETTER
            AGREEMENTLETTER
      AGREEMENT

     

    September
      18, 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”),
      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 RESTORATION 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”),
      (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”),
      (g)
      the Letter Agreement, dated as of September 3, 2008, by and among the Company,
      Michael O’Reilly, individually, the Subsidiaries, LV Administrative Services,
      Inc., as agent for the Purchasers (“Agent”),
      and
      the Purchasers (as amended, restated, modified and/or supplemented from time
      to
      time, the “First
      Letter Agreement”
and
      (h)
      the Letter Agreement, dated as of September 16, 2008 by and among the Company,
      the Subsidiaries, the Agent, and the Purchasers (as amended, restated, modified
      and/or supplemented from time to time, the “Second
      Letter Agreement”
and,
      together with the Purchase Agreement, the Secured Term Note, the Secured
      Convertible Term Note, the demand notes issued under the First Letter Agreement
      and Second Letter Agreement (the “Existing
      Demand Notes”
and
      together with the Secured Term Note and the Secured Convertible Term Note,
      collectively, the “Existing
      Notes”),
      the
      Security Agreement, the Guaranty, the Reaffirmation Agreements and each other
      ancillary document, instrument and agreement executed in connection therewith,
      each an “Existing
      Agreement”
and,
      collectively, the “Existing
      Agreements).
      Defined terms used in this letter agreement (the “Third Letter
      Agreement”)
      but
      not otherwise defined in this Third Letter Agreement shall have the meanings
      ascribed to those terms in the Purchase Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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
      Amended and Restated Demand Note, dated as of the date hereof, in the principal
      amount of $9,378.00 in favor of Valens U.S., (b) the Amended and Restated Demand
      Note, dated as of the date hereof, in the principal amount of $35,577.00 in
      favor of Valens Offshore and (c) the Amended and Restated Demand Note, dated
      as
      of the date hereof, in the principal amount of $195,445.00 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 $6,695,228.14;

     

    (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 ONE HUNDRED TWENTY THOUSAND TWO HUNDRED
      DOLLARS ($120,200.00) (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 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 One Thousand Six Hundred Fifty
      Dollars ($1,650.00), plus reasonable expenses (including legal fees and
      expenses) incurred in connection with the entering into of this Third 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. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (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 Third Letter Agreement and
      all documents, instruments and agreements executed in connection herewith and
      therewith (together the “New
      Agreements);

     

    (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, the New Agreements 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 Third 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 Third 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 Third 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

        
          

        

      

      
         

      

    

     

    This
      Third 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 RESTORATION 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

        

        
          

        

      

      
         

      

    

     

    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/
      Sandra Appavoo

    
      
        

      

    

    Name: Sandra
      Appavoo

    Title: Managing
      Director, PSource Capital Limited, 

              
Its
      investment consultant

     

    
       

      
        
           

        

        
          
            SIGNATURE
              PAGE TO

            LETTER
              AGREEMENT

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