Document:

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                                                                    Exhibit 10.7

                     AMENDED AND RESTATED SECURITY AGREEMENT

      THIS AMENDED AND RESTATED SECURITY AGREEMENT (the "Agreement"), is entered
into and made effective as of August 23, 2005, by and between U.S. HELICOPTER
CORPORATION, a Delaware corporation (the "Company"), and the BUYER(S) listed on
Schedule I attached to the Securities Purchase Agreement dated the date hereof
(the "Secured Party").

      WHEREAS, the Company issued to the Secured Party convertible debentures
under the Securities Purchase Agreement dated August 4, 2004 between the Company
and the Secured Party. This Agreement shall amend and restate the Security
Agreement between the Company and the Secured Party dated August 4, 2004;

      WHEREAS, the Company has requested the Secured Party to make additional
financing available to the Company;

      WHEREAS, the Secured Party is willing to provide such additional financing
on the condition that such additional financing is secured hereunder and under
the UCC-1 Financing Statement filed in Delaware on August 5, 2004, file number
42203596, in connection with the Securities Purchase Agreement dated August 4,
2004;

      WHEREAS, all of the Company's obligations to the Secured Party are secured
by this Agreement, which was perfected pursuant to that certain UCC-1 Financing
Statement filed in Delaware on August 5, 2004, file number 42203596;

      WHEREAS, the Company shall issue and sell to the Secured Party, as
provided in the Securities Purchase Agreement dated the date hereof, and the
Secured Party shall purchase a minimum of Two Hundred Twenty Thousand Dollars
($220,000) of five percent (5%) secured convertible debentures (the "Convertible
Debentures"), which shall be convertible into shares of the Company's common
stock, par value $.001 per share (the "Common Stock") (as converted, the
"Conversion Shares"), in the respective amounts set forth opposite each Buyer(s)
name on Schedule I attached to the Securities Purchase Agreement of even date
herewith;

      WHEREAS, to induce the Secured Party to enter into the transaction
contemplated by the Securities Purchase Agreement, the Secured Convertible
Debenture, the Investor Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions, and the Escrow Agreement, all of even date herewith
(collectively referred to as the "Transaction Documents"), the Company hereby
grants to the Secured Party a security interest in and to the pledged property
identified on Exhibit "A" hereto (collectively referred to as the "Pledged
Property") until the satisfaction of the Obligations, as defined herein below;
and

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:

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                                   ARTICLE 1.

                         DEFINITIONS AND INTERPRETATIONS

      Section 1.1. Recitals.

      The above recitals are true and correct and are incorporated herein, in
their entirety, by this reference.

      Section 1.2. Interpretations.

      Nothing herein expressed or implied is intended or shall be construed to
confer upon any person other than the Secured Party any right, remedy or claim
under or by reason hereof.

      Section 1.3. Obligations Secured.

      The obligations secured hereby are any and all obligations of the Company
now existing or hereinafter incurred to the Secured Party, whether oral or
written and whether arising before, on or after the date hereof including,
without limitation, those obligations of the Company to the Secured Party under
the Securities Purchase Agreement, the Secured Convertible Debenture, the
Investor Registration Rights Agreement and Irrevocable Transfer Agent
Instructions, and any other amounts now or hereafter owed to the Secured Party
by the Company thereunder or hereunder (collectively, the "Obligations").

                                   ARTICLE 2.

              PLEDGED COLLATERAL, ADMINISTRATION OF COLLATERAL AND
                        TERMINATION OF SECURITY INTEREST

      Section 2.1. Pledged Property.

            (a) Company hereby pledges to the Secured Party, and creates in the
Secured Party for its benefit, a security interest for such time until the
Obligations are paid in full, in and to all of the property of the Company as
set forth in Exhibit "A" attached hereto (collectively, the "Pledged Property");
provided, however, that Secured Party agrees that it will subordinate the
priority of the lien of its security interest to the Pledged Property in the
event that the Company (i) requests such subordination to establish a line of
credit with a bank or other financial institution, or (ii) enters into a
financing transaction for acquisition of capital equipment where a lender
requires a priority lien, but in such case any lien priority subordination shall
only apply to the equipment so purchased, leased or financed.

      The Pledged Property, as set forth in Exhibit "A" attached hereto, and the
products thereof and the proceeds of all such items are hereinafter collectively
referred to as the "Pledged Collateral."

            (b) Simultaneously with the execution and delivery of this
Agreement, the Company shall make, execute, acknowledge, file, record and
deliver to the Secured Party any documents reasonably requested by the Secured
Party to perfect its security interest in the Pledged Property. Simultaneously
with the execution and delivery of this Agreement, the

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Company shall make, execute, acknowledge and deliver to the Secured Party such
documents and instruments, including, without limitation, financing statements,
certificates, affidavits and forms as may, in the Secured Party's reasonable
judgment, be necessary to effectuate, complete or perfect, or to continue and
preserve, the security interest of the Secured Party in the Pledged Property,
and the Secured Party shall hold such documents and instruments as secured
party, subject to the terms and conditions contained herein.

      Section 2.2. Rights; Interests; Etc.

            (a) So long as no Event of Default (as hereinafter defined) shall
have occurred and be continuing:

                  (i) the Company shall be entitled to exercise any and all
rights pertaining to the Pledged Property or any part thereof for any purpose
not inconsistent with the terms hereof; and

                  (ii) the Company shall be entitled to receive and retain any
and all payments paid or made in respect of the Pledged Property.

            (b) Upon the occurrence and during the continuance of an Event of
Default:

                  (i) All rights of the Company to exercise the rights which it
would otherwise be entitled to exercise pursuant to Section 2.2(a)(i) hereof and
to receive payments which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such rights
shall thereupon become vested in the Secured Party who shall thereupon have the
sole right to exercise such rights and to receive and hold as Pledged Collateral
such payments; provided, however, that if the Secured Party shall become
entitled and shall elect to exercise its right to realize on the Pledged
Collateral pursuant to Article 5 hereof, then all cash sums received by the
Secured Party, or held by Company for the benefit of the Secured Party and paid
over pursuant to Section 2.2(b)(ii) hereof, shall be applied against any
outstanding Obligations; and

                  (ii) All interest, dividends, income and other payments and
distributions which are received by the Company contrary to the provisions of
Section 2.2(b)(i) hereof shall be received in trust for the benefit of the
Secured Party, shall be segregated from other property of the Company and shall
be forthwith paid over to the Secured Party; or

                  (iii) The Secured Party in its sole discretion shall be
authorized to sell any or all of the Pledged Property at public or private sale
in order to recoup all of the outstanding principal plus accrued interest owed
pursuant to the Convertible Debenture as described herein.

            (c) Each of the following events shall constitute a default under
this Agreement (each an "Event of Default"):

                  (i) any default, whether in whole or in part, shall occur in
the payment to the Secured Party of principal, interest or other item comprising
the Obligations as and when due or with respect to any other secured debt or
material obligation of the Company to a party other than the Secured Party;

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                  (ii) any uncured default, whether in whole or in part, shall
occur in the due observance or performance of any material obligations,
warranties or other covenants, terms or provisions to be performed under this
Agreement or the Transaction Documents or under all documents between the
Company and the Secured Party dated August 4, 2004;

                  (iii) the Company shall: (1) make a general assignment for the
benefit of its creditors; (2) apply for or consent to the appointment of a
receiver, trustee, assignee, custodian, sequestrator, liquidator or similar
official for itself or any of its assets and properties; (3) commence a
voluntary case for relief as a debtor under the United States Bankruptcy Code;
(4) file with or otherwise submit to any governmental authority any petition,
answer or other document seeking: (A) reorganization, (B) an arrangement with
creditors or (C) to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief
of debtors, dissolution or liquidation; (5) file or otherwise submit any answer
or other document admitting or failing to contest the material allegations of a
petition or other document filed or otherwise submitted against it in any
proceeding under any such applicable law, or (6) be adjudicated a bankrupt or
insolvent by a court of competent jurisdiction; or

                  (iv) any case, proceeding or other action shall be commenced
against the Company for the purpose of effecting, or an order, judgment or
decree shall be entered by any court of competent jurisdiction approving (in
whole or in part) anything specified in Section 2.2(c)(iii) hereof, or any
receiver, trustee, assignee, custodian, sequestrator, liquidator or other
official shall be appointed with respect to the Company, or shall be appointed
to take or shall otherwise acquire possession or control of all or a substantial
part of the assets and properties of the Company, and any of the foregoing shall
continue unstayed and in effect for any period of thirty (30) days.

                  (v) any obligation of Company (other than its Obligations
under this Agreement) for the payment of borrowed money is not paid when due or
within any applicable grace period, or such obligation becomes or is declared to
be due and payable before the expressed maturity of the obligation, or there
shall have occurred an event that, with the giving of notice or lapse of time,
or both, would cause any such obligation to become, or allow any such obligation
to be declared to be, due and payable.

                  (vi) a breach by the Company of any material contract that
would have a material adverse affect upon the business of the Company.

                                   ARTICLE 3.

                          ATTORNEY-IN-FACT; PERFORMANCE

      Section 3.1. Secured Party Appointed Attorney-In-Fact.

      Upon the occurrence of an Event of Default, the Company hereby appoints
the Secured Party as its attorney-in-fact, with full authority in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Secured Party's discretion to take any action and to execute any
instrument which the Secured Party may reasonably deem

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necessary to accomplish the purposes of this Agreement, including, without
limitation, to receive and collect all instruments made payable to the Company
representing any payments in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same. The Secured Party may demand,
collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize
on the Pledged Property as and when the Secured Party may determine. To
facilitate collection, the Secured Party may notify account debtors and obligors
on any Pledged Property or Pledged Collateral to make payments directly to the
Secured Party.

      Section 3.2. Secured Party May Perform.

      If the Company fails to perform any agreement contained herein, the
Secured Party, at its option, may itself perform, or cause performance of, such
agreement, and the expenses of the Secured Party incurred in connection
therewith shall be included in the Obligations secured hereby and payable by the
Company under Section 8.3.

                                   ARTICLE 4.

                         REPRESENTATIONS AND WARRANTIES

      Section 4.1. Authorization; Enforceability.

      Each of the parties hereto represents and warrants that it has taken all
action necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby; and upon execution and
delivery, this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights or by the principles
governing the availability of equitable remedies.

      Section 4.2. Ownership of Pledged Property.

      The Company warrants and represents that it is the legal and beneficial
owner of the Pledged Property free and clear of any lien, security interest,
option or other charge or encumbrance except for the security interest created
by this Agreement.

                                   ARTICLE 5.

                    DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

      Section 5.1. Default and Remedies.

            (a) If an Event of Default described in Section 2.2(c)(i) and (ii)
occurs, then in each such case the Secured Party may declare the Obligations to
be due and payable immediately, by a notice in writing to the Company, and upon
any such declaration, the Obligations shall become immediately due and payable.
If an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is
continuing for the period set forth therein, then the Obligations shall
automatically become immediately due and payable without declaration or other
act on the part of the Secured Party.

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            (b) Upon the occurrence of an Event of Default, the Secured Party
shall: (i) be entitled to receive all distributions with respect to the Pledged
Collateral, (ii) to cause the Pledged Property to be transferred into the name
of the Secured Party or its nominee, (iii) to dispose of the Pledged Property,
and (iv) to realize upon any and all rights in the Pledged Property then held by
the Secured Party.

      Section 5.2. Method of Realizing Upon the Pledged Property: Other
Remedies.

      Upon the occurrence of an Event of Default, in addition to any rights and
remedies available at law or in equity, the following provisions shall govern
the Secured Party's right to realize upon the Pledged Property:

            (a) Any item of the Pledged Property may be sold for cash or other
value in any number of lots at brokers board, public auction or private sale and
may be sold without demand, advertisement or notice (except that the Secured
Party shall give the Company ten (10) days' prior written notice of the time and
place or of the time after which a private sale may be made (the "Sale
Notice")), which notice period shall in any event is hereby agreed to be
commercially reasonable. At any sale or sales of the Pledged Property, the
Company may bid for and purchase the whole or any part of the Pledged Property
and, upon compliance with the terms of such sale, may hold, exploit and dispose
of the same without further accountability to the Secured Party. The Company
will execute and deliver, or cause to be executed and delivered, such
instruments, documents, assignments, waivers, certificates, and affidavits and
supply or cause to be supplied such further information and take such further
action as the Secured Party reasonably shall require in connection with any such
sale.

            (b) Any cash being held by the Secured Party as Pledged Collateral
and all cash proceeds received by the Secured Party in respect of, sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral shall be applied as follows:

                  (i) to the payment of all amounts due the Secured Party for
the expenses reimbursable to it hereunder or owed to it pursuant to Section 8.3
hereof;

                  (ii) to the payment of the Obligations then due and unpaid.

                  (iii) the balance, if any, to the person or persons entitled
thereto, including, without limitation, the Company.

            (c) In addition to all of the rights and remedies which the Secured
Party may have pursuant to this Agreement, the Secured Party shall have all of
the rights and remedies provided by law, including, without limitation, those
under the Uniform Commercial Code.

                  (i) If the Company fails to pay such amounts due upon the
occurrence of an Event of Default which is continuing, then the Secured Party
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company and collect the monies adjudged or decreed
to be payable in the manner provided by law out of the property of Company,
wherever situated.

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                  (ii) The Company agrees that it shall be liable for any
reasonable fees, expenses and costs incurred by the Secured Party in connection
with enforcement, collection and preservation of the Transaction Documents,
including, without limitation, reasonable legal fees and expenses, and such
amounts shall be deemed included as Obligations secured hereby and payable as
set forth in Section 8.3 hereof.

      Section 5.3. Proofs of Claim.

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relating to the Company or the property of the Company
or of such other obligor or its creditors, the Secured Party (irrespective of
whether the Obligations shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Secured Party shall
have made any demand on the Company for the payment of the Obligations), subject
to the rights of Previous Security Holders, shall be entitled and empowered, by
intervention in such proceeding or otherwise:

            (i) to file and prove a claim for the whole amount of the
Obligations and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Secured Party (including any claim
for the reasonable legal fees and expenses and other expenses paid or incurred
by the Secured Party permitted hereunder and of the Secured Party allowed in
such judicial proceeding), and

            (ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by the Secured Party to
make such payments to the Secured Party and, in the event that the Secured Party
shall consent to the making of such payments directed to the Secured Party, to
pay to the Secured Party any amounts for expenses due it hereunder.

      Section 5.4. Duties Regarding Pledged Collateral.

      The Secured Party shall have no duty as to the collection or protection of
the Pledged Property or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party's possession.

                                   ARTICLE 6.

                              AFFIRMATIVE COVENANTS

      The Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing (as provided in Section 8.4 hereof):

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      Section 6.1. Existence, Properties, Etc.

            (a) The Company shall do, or cause to be done, all things, or
proceed with due diligence with any actions or courses of action, that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and good standing under the laws of its state of incorporation, and (ii) to
preserve and keep in full force and effect all qualifications, licenses and
registrations in those jurisdictions in which the failure to do so could have a
Material Adverse Effect (as defined below); and (b) the Company shall not do, or
cause to be done, any act impairing the Company's corporate power or authority
(i) to carry on the Company's business as now conducted, and (ii) to execute or
deliver this Agreement or any other document delivered in connection herewith,
including, without limitation, any UCC-1 Financing Statements required by the
Secured Party (which other loan instruments collectively shall be referred to as
the "Loan Instruments") to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the term
"Material Adverse Effect" shall mean any material and adverse affect as
determined by Secured Party in its reasonable discretion, whether individually
or in the aggregate, upon (a) the Company's assets, business, operations,
properties or condition, financial or otherwise; (b) the Company's to make
payment as and when due of all or any part of the Obligations; or (c) the
Pledged Property.

      Section 6.2. Financial Statements and Reports.

      The Company shall furnish to the Secured Party such financial data as the
Secured Party may reasonably request. Without limiting the foregoing, the
Company shall furnish to the Secured Party (or cause to be furnished to the
Secured Party) the following:

            (a) as soon as practicable and in any event within ninety (90) days
after the end of each fiscal year of the Company, the balance sheet of the
Company as of the close of such fiscal year, the statement of earnings and
retained earnings of the Company as of the close of such fiscal year, and
statement of cash flows for the Company for such fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting principles
consistently applied, certified by the chief executive and chief financial
officers of the Company as being true and correct and accompanied by a
certificate of the chief executive and chief financial officers of the Company,
stating that the Company has kept, observed, performed and fulfilled each
covenant, term and condition of this Agreement and the other Loan Instruments
during such fiscal year and that no Event of Default hereunder has occurred and
is continuing, or if an Event of Default has occurred and is continuing,
specifying the nature of same, the period of existence of same and the action
the Company proposes to take in connection therewith;

            (b) within thirty (30) days of the end of each calendar month, a
balance sheet of the Company as of the close of such month, and statement of
earnings and retained earnings of the Company as of the close of such month, all
in reasonable detail, and prepared substantially in accordance with generally
accepted accounting principles consistently applied, certified by the chief
executive and chief financial officers of the Company as being true and correct;
and

            (c) promptly upon receipt thereof, copies of all accountants'
reports and accompanying financial reports submitted to the Company by
independent accountants in connection with each annual examination of the
Company.

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      Section 6.3. Accounts and Reports.

      The Company shall maintain a standard system of accounting in accordance
with generally accepted accounting principles consistently applied and provide,
at its sole expense, to the Secured Party the following:

            (a) as soon as available, a copy of any notice or other
communication alleging any nonpayment or other material breach or default, or
any foreclosure or other action respecting any material portion of its assets
and properties, received respecting any of the indebtedness of the Company in
excess of $50,000 (other than the Obligations), or any demand or other request
for payment under any guaranty, assumption, purchase agreement or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess of $50,000, including any received from any person acting on behalf of
the Secured Party or beneficiary thereof; and

            (b) within fifteen (15) days after the making of each submission or
filing, a copy of any report, financial statement, notice or other document,
whether periodic or otherwise, submitted to the shareholders of the Company, or
submitted to or filed by the Company with any governmental authority involving
or affecting (i) the Company that could have a Material Adverse Effect; (ii) the
Obligations; (iii) any part of the Pledged Collateral; or (iv) any of the
transactions contemplated in this Agreement or the Loan Instruments.

      Section 6.4. Maintenance of Books and Records; Inspection.

      The Company shall maintain its books, accounts and records in accordance
with generally accepted accounting principles consistently applied, and permit
the Secured Party, its officers and employees and any professionals designated
by the Secured Party in writing, at any time to visit and inspect any of its
properties (including but not limited to the collateral security described in
the Transaction Documents and/or the Loan Instruments), corporate books and
financial records, and to discuss its accounts, affairs and finances with any
employee, officer or director thereof.

      Section 6.5. Maintenance and Insurance.

            (a) The Company shall maintain or cause to be maintained, at its own
expense, all of its assets and properties in good working order and condition,
subject to ordinary wear and tear, making all necessary repairs thereto and
renewals and replacements thereof.

            (b) The Company shall maintain or cause to be maintained, at its own
expense, insurance in form, substance and amounts (including deductibles), which
the Company deems reasonably necessary to the Company's business, (i) adequate
to insure all assets and properties of the Company, which assets and properties
are of a character usually insured by persons engaged in the same or similar
business against loss or damage resulting from fire or other risks included in
an extended coverage policy; (ii) against public liability and other tort claims
that may be incurred by the Company; (iii) as may be required by the Transaction
Documents and/or the Loan Instruments or applicable law and (iv) as may be
reasonably requested by Secured Party, all with adequate, financially sound and
reputable insurers.

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      Section 6.6. Contracts and Other Collateral.

      The Company shall perform all of its obligations under or with respect to
each instrument, receivable, contract and other intangible included in the
Pledged Property to which the Company is now or hereafter will be party on a
timely basis and in the manner therein required, including, without limitation,
this Agreement.

      Section 6.7. Defense of Collateral, Etc.

      The Company shall defend and enforce its right, title and interest in and
to any part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss could have a Material
Adverse Effect, the Company shall defend the Secured Party's right, title and
interest in and to each and every part of the Pledged Property, each against all
manner of claims and demands on a timely basis to the full extent permitted by
applicable law.

      Section 6.8. Payment of Debts, Taxes, Etc.

      The Company shall pay, or cause to be paid, all of its indebtedness and
other liabilities and perform, or cause to be performed, all of its obligations
in accordance with the respective terms thereof, and pay and discharge, or cause
to be paid or discharged, all taxes, assessments and other governmental charges
and levies imposed upon it, upon any of its assets and properties on or before
the last day on which the same may be paid without penalty, as well as pay all
other lawful claims (whether for services, labor, materials, supplies or
otherwise) as and when due.

      Section 6.9. Taxes and Assessments; Tax Indemnity.

      The Company shall (a) file all tax returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its properties;
provided, however, that the Company in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto.

      Section 6.10. Compliance with Law and Other Agreements.

      The Company shall maintain its business operations and property owned or
used in connection therewith in compliance with (a) all applicable federal,
state and local laws, regulations and ordinances governing such business
operations and the use and ownership of such property, and (b) all agreements,
licenses, franchises, indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound. Without limiting the
foregoing, the Company shall pay all of its indebtedness promptly in accordance
with the terms thereof.

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      Section 6.11. Notice of Default.

      The Company shall give written notice to the Secured Party of the
occurrence of any default or Event of Default under this Agreement, the
Transaction Documents or any other Loan Instrument or any other agreement of
Company for the payment of money, promptly upon the occurrence thereof.

      Section 6.12. Notice of Litigation.

      The Company shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$50,000, instituted by any persons against the Company, or affecting any of the
assets of the Company, and (b) any dispute, not resolved within fifteen (15)
days of the commencement thereof, between the Company on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be
expected to have a Material Adverse Effect on the business operations or
financial condition of the Company.

                                   ARTICLE 7.

                               NEGATIVE COVENANTS

      The Company covenants and agrees that, from the date hereof until the
Obligations have been fully paid and satisfied, the Company shall not, unless
the Secured Party shall consent otherwise in writing:

      Section 7.1. Liens and Encumbrances.

      Except as may be permitted under Section 2.1(a) above, the Company shall
not directly or indirectly make, create, incur, assume or permit to exist any
assignment, transfer, pledge, mortgage, security interest or other lien or
encumbrance of any nature in, to or against any part of the Pledged Property or
of the Company's capital stock, or offer or agree to do so, or own or acquire or
agree to acquire any asset or property of any character subject to any of the
foregoing encumbrances (including any conditional sale contract or other title
retention agreement), or assign, pledge or in any way transfer or encumber its
right to receive any income or other distribution or proceeds from any part of
the Pledged Property or the Company's capital stock; or enter into any
sale-leaseback financing respecting any part of the Pledged Property as lessee,
or cause or assist the inception or continuation of any of the foregoing.

      Section 7.1. Articles, By-Laws, Mergers, Consolidations, Acquisitions and
Sales.

      Without the prior express written consent of the Secured Party, which
consent shall not be unreasonably withheld, the Company shall not: (a) Amend its
Articles of Incorporation or By-Laws; (b) be a party to any merger,
consolidation or corporate reorganization; (c) purchase or otherwise acquire all
or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity; (d) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets; nor (e) create any subsidiaries nor convey any of its assets to any
subsidiary in excess of $200,000 in the aggregate.

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      Section 7.2. Management, Ownership.

      John G. Murphy shall remain employed by the Company in his current
capacity. This provision is a material factor in the Secured Party's willingness
to institute and maintain a lending relationship with the Company.

      Section 7.3. Dividends, Etc.

      The Company shall not declare or pay any dividend of any kind, in cash, on
any class of its capital stock, nor purchase, redeem, retire or otherwise
acquire for value any shares of such stock, nor make any distribution of any
kind in respect thereof, nor make any return of capital to shareholders, nor
make any payments in respect of any pension, profit sharing, retirement, stock
option, stock bonus, incentive compensation or similar plan (except as required
or permitted hereunder), without the prior written consent of the Secured Party,
which consent shall not be unreasonably withheld.

      Section 7.4. Conduct of Business.

      The Company will continue to engage, in an efficient and economical
manner, in a business of the same general type as intended to be conducted by it
on the date of this Agreement.

      Section 7.5. Places of Business.

      The location of the Company's chief place of business is Downtown
Manhattan Heliport, Pier 6, East River, New York, New York 10004. The Company
shall not change the location of its chief place of business, chief executive
office or any place of business disclosed to the Secured Party or move any of
the Pledged Property from its current location without thirty (30) days prior
written notice to the Secured Party in each instance.

                                   ARTICLE 8.

                                  MISCELLANEOUS

      Section 8.1. Notices.

      All notices or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as duly
given on: (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:

            If to the Secured Party:  Cornell Capital Partners, LP
                                      101 Hudson Street-Suite 3700
                                      Jersey City, New Jersey 07302
                                      Attention: Mark Angelo
                                                 Portfolio Manager
                                      Telephone: (201) 986-8300

                                       12
<PAGE>

                                      Facsimile: (201) 985-8266

            With a copy to:           Cornell Capital Partners, LP
                                      101 Hudson Street-Suite 3700
                                      Jersey City, New Jersey 07302
                                      Attention: Troy J. Rillo, Esquire
                                                 Senior Vice President
                                                 Capital Markets
                                      Telephone: (201) 985-8300
                                      Facsimile: (201) 985-8266

            And if to the Company:    U.S. Helicopter Corporation
                                      Downtown Manhattan Heliport
                                      Pier 6, East Rive
                                      New York, New York 10004
                                      Attention: John G. Murphy, President & CEO
                                      Telephone: (212) 248-2002
                                      Facsimile: (212) 248-0940

            With a copy to:           Gallagher, Briody & Butler
                                      Princeton Forrestal Village
                                      155 Village Boulevard, Suite 201
                                      Princeton, New Jersey 08540
                                      Attention: Thomas P. Gallagher, Esq.
                                      Telephone: (609) 452-6000
                                      Facsimile: (609) 452-0090

      Any party may change its address by giving notice to the other party
stating its new address. Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.

      Section 8.2. Severability.

      If any provision of this Agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Agreement, and this Agreement shall be carried out
as if any such invalid or unenforceable provision were not contained herein.

      Section 8.3. Expenses.

      In the event of an Event of Default, the Company will pay to the Secured
Party the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel, which the Secured Party may incur in
connection with: (i) the custody or preservation of, or the sale, collection
from, or other realization upon, any of the Pledged Property; (ii) the

                                       13
<PAGE>

exercise or enforcement of any of the rights of the Secured Party hereunder or
(iii) the failure by the Company to perform or observe any of the provisions
hereof.

      Section 8.4. Waivers, Amendments, Etc.

      The Secured Party's delay or failure at any time or times hereafter to
require strict performance by Company of any undertakings, agreements or
covenants shall not waiver, affect, or diminish any right of the Secured Party
under this Agreement to demand strict compliance and performance herewith. Any
waiver by the Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party, nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party.

      Section 8.5. Continuing Security Interest.

      This Agreement shall create a continuing security interest in the Pledged
Property and shall: (i) remain in full force and effect until payment in full of
the Obligations; and (ii) be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its successors and
assigns. Upon the payment or satisfaction in full of the Obligations, the
Company shall be entitled to the return, at its expense, of such of the Pledged
Property as shall not have been sold in accordance with Section 5.2 hereof or
otherwise applied pursuant to the terms hereof.

      Section 8.6. Independent Representation.

      Each party hereto acknowledges and agrees that it has received or has had
the opportunity to receive independent legal counsel of its own choice and that
it has been sufficiently apprised of its rights and responsibilities with regard
to the substance of this Agreement.

      Section 8.7. Applicable Law: Jurisdiction.

      This Agreement shall be governed by and interpreted in accordance with the
laws of the State of New Jersey without regard to the principles of conflict of
laws. The parties further agree that any action between them shall be heard in
Hudson County, New Jersey, and expressly consent to the jurisdiction and venue
of the Superior Court of New Jersey, sitting in Hudson County and the United
States District Court for the District of New Jersey sitting in Newark, New
Jersey for the adjudication of any civil action asserted pursuant to this
Paragraph.

      Section 8.8. Waiver of Jury Trial.

      AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT
AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY IN

                                       14
<PAGE>

ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL
OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

      Section 8.9. Entire Agreement.

      This Agreement constitutes the entire agreement among the parties and
supersedes any prior agreement or understanding among them with respect to the
subject matter hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                              COMPANY:

                                              U.S. HELICOPTER CORPORATION

                                              By:   /s/ John G. Murphy
                                                    ------------------
                                              Name:    John G. Murphy
                                              Title:   President & CEO

                                              SECURED PARTY:
                                              CORNELL CAPITAL PARTNERS, LP

                                              BY:      YORKVILLE ADVISORS, LLC
                                              ITS:     GENERAL PARTNER

                                              By:   /s/ Mark Angelo
                                                    ------------------
                                              Name:    Mark Angelo
                                              Title:   Portfolio Manager

<PAGE>

                                    EXHIBIT A
                         DEFINITION OF PLEDGED PROPERTY

         For the purpose of securing prompt and complete payment and performance
by the Company of all of the Obligations, the Company unconditionally and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:

            (a) all goods of the Company, including, without limitation,
machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools,
parts, supplies and motor vehicles of every kind and description, now or
hereafter owned by the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions, accessions, substitutions
and proceeds thereof, arising from the sale or disposition thereof, and where
applicable, the proceeds of insurance and of any tort claims involving any of
the foregoing;

            (b) all inventory of the Company, including, but not limited to, all
goods, wares, merchandise, parts, supplies, finished products, other tangible
personal property, including such inventory as is temporarily out of Company's
custody or possession and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale or disposition
of any of the foregoing;

            (c) all contract rights and general intangibles of the Company,
including, without limitation, goodwill, trademarks, trade styles, trade names,
leasehold interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created;

            (d) all documents, warehouse receipts, instruments and chattel paper
of the Company whether now owned or hereafter created;

            (e) all accounts and other receivables, instruments or other forms
of obligations and rights to payment of the Company (herein collectively
referred to as "Accounts"), together with the proceeds thereof, all goods
represented by such Accounts and all such goods that may be returned by the
Company's customers, and all proceeds of any insurance thereon, and all
guarantees, securities and liens which the Company may hold for the payment of
any such Accounts including, without limitation, all rights of stoppage in
transit, replevin and reclamation and as an unpaid vendor and/or lienor, all of
which the Company represents and warrants will be bona fide and existing
obligations of its respective customers, arising out of the sale of goods by the
Company in the ordinary course of business;

            (f) to the extent assignable, all of the Company's rights under all
present and future authorizations, permits, licenses and franchises issued or
granted in connection with the operations of any of its facilities;

            (g) all products and proceeds (including, without limitation,
insurance proceeds) from the above-described Pledged Property.

                                      A-1<PAGE>
                                                                   Exhibit 10.40

                          SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of August
23, 2005 by and among U.S. HELICOPTER CORPORATION, a Delaware corporation (the
"Company") and the Buyers listed on Schedule I attached hereto (individually, a
"Buyer" or collectively "Buyers").

                                   WITNESSETH:

     WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");

     WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyer(s),
as provided herein, and the Buyer(s) shall purchase Two Hundred Twenty Thousand
Dollars ($220,000) of secured convertible debentures (the "Convertible
Debentures"), which shall be convertible into shares of the Company's common
stock, par value $0.001 per share (the "Common Stock") (as converted, the
"Conversion Shares"), which shall be funded within five (5) business days hereof
(the "Closing"), for a total purchase price of Two Hundred Twenty Thousand
Dollars ($220,000) (the "Purchase Price") in the respective amounts set forth
opposite each Buyer(s) name on Schedule I (the "Subscription Amount"); and

     WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement (the "Investor Registration Rights Agreement") pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act and
the rules and regulations promulgated there under, and applicable state
securities laws; and

     WHEREAS, the aggregate proceeds of the sale of the Convertible Debentures
contemplated hereby shall be held in escrow pursuant to the terms of an Escrow
Agreement (the "Escrow Agreement") of even date herewith.

     WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering Irrevocable Transfer
Agent Instructions (the "Irrevocable Transfer Agent Instructions").

     WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering an Amended and
Restated Security Agreement, which amends and restates the Security Agreement
dated August 4, 2004 (the "Amended and Restated Security Agreement") pursuant to
which the Company has agreed to provide the Buyer a security interest in Pledged
Collateral (as this term is defined in the Amended and Restated Security
Agreement) to secure Company's obligations under this Agreement, the Convertible
Debenture, the Investor Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions, or any other obligations of the Company to the Investor.
<PAGE>
     NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement the Company and the Buyer(s) hereby agree
as follows:

     1.   PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

          (a) Purchase of Convertible Debentures. Subject to the satisfaction
(or waiver) of the terms and conditions of this Agreement, each Buyer agrees,
severally and not jointly, to purchase at the Closing and the Company agrees to
sell and issue to each Buyer, severally and not jointly, at the Closing,
Convertible Debentures in amounts corresponding with the Subscription Amount set
forth opposite each Buyer's name on Schedule I hereto. Upon execution hereof by
a Buyer, the Buyer shall wire transfer the Subscription Amount set forth
opposite his name on Schedule I in same-day funds or a check payable to "David
Gonzalez, Esq., as Escrow Agent for U.S. Helicopter Corporation/Cornell Capital
Partners, LP", which Subscription Amount shall be held in escrow pursuant to the
terms of the Escrow Agreement (as hereinafter defined) and disbursed in
accordance therewith.

          (b) Closing Date. The Closing of the purchase and sale of the
Convertible Debentures shall take place on or before the fifth (5th) business
day following the date hereof, subject to notification of satisfaction of the
conditions to the Closing set forth herein and in Sections 6 and 7 below (or
such later date as is mutually agreed to by the Company and the Buyer(s)) (the
"Closing Date"). The Closing shall occur on the respective Closing Dates at the
offices of Yorkville Advisors, LLC, 101 Hudson Street, Suite 3700, Jersey City,
New Jersey 07302 (or such other place as is mutually agreed to by the Company
and the Buyer(s)).

          (c) Escrow Arrangements; Form of Payment. Upon execution hereof by
Buyer(s) and pending the Closing, the aggregate proceeds of the sale of the
Convertible Debentures to Buyer(s) pursuant hereto shall be deposited in a
non-interest bearing escrow account with David Gonzalez, Esq., as escrow agent
(the "Escrow Agent"), pursuant to the terms of the Escrow Agreement. Subject to
the satisfaction of the terms and conditions of this Agreement, on the Closing
Date, (i) the Escrow Agent shall deliver to the Company in accordance with the
terms of the Escrow Agreement such aggregate proceeds for the Convertible
Debentures to be issued and sold to such Buyer(s), minus a structuring fee of
Ten Thousand Dollars ($10,000) to the Buyer pursuant to Section 4 hereof and the
Twenty Thousand Dollar ($20,000) commitment fee referenced in Section 4 hereof,
both of which shall be paid directly from the gross proceeds of the Closing held
in escrow, and (ii) the Company shall deliver to each Buyer, Convertible
Debentures which such Buyer(s) is purchasing in amounts indicated opposite such
Buyer's name on Schedule I, duly executed on behalf of the Company.

     2.   BUYER'S REPRESENTATIONS AND WARRANTIES.

     Each Buyer represents and warrants, severally and not jointly, that:

          (a) Investment Purpose. Each Buyer is acquiring the Convertible
Debentures and, upon conversion of Convertible Debentures, the Buyer will
acquire the Conversion Shares then issuable, for its own account for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered or exempted
under the 1933 Act; and has no present or contemplated agreement, undertaking,

                                        2
<PAGE>
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof; provided, however, that by making the representations
herein, such Buyer reserves the right to dispose of the Conversion Shares at any
time in accordance with or pursuant to an effective registration statement (the
"Registration Statement") covering such Conversion Shares or an available
exemption under the 1933 Act.

          (b) Accredited Investor Status. Each Buyer is an "Accredited Investor"
as that term is defined in Rule 501(a)(3) of Regulation D.

          (c) Reliance on Exemptions. Each Buyer understands that the
Convertible Debentures are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
such Buyer to acquire such securities.

          (d) Information. Each Buyer and its advisors (and his or, its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information he deemed
material to making an informed investment decision regarding his purchase of the
Convertible Debentures and the Conversion Shares, which have been requested by
such Buyer. Each Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. Each Buyer understands that its investment in the
Convertible Debentures and the Conversion Shares involves a high degree of risk
and each Buyer has the financial wherewithal to lose its entire investment and
understands that it could lose its entire investment. Each Buyer is in a
position regarding the Company, which, based upon employment, family
relationship or economic bargaining power, enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks of
this investment. Each Buyer has sought such accounting, legal and tax advice, as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Convertible Debentures and the Conversion Shares.

          (e) No Governmental Review. Each Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Convertible
Debentures or the Conversion Shares, or the fairness or suitability of the
investment in the Convertible Debentures or the Conversion Shares, nor have such
authorities passed upon or endorsed the merits of the offering of the
Convertible Debentures or the Conversion Shares. Each Buyer understands and
acknowledges that the Company has undertaken and will undertake no efforts to
comply with any laws of any jurisdiction outside the United States relating to
the insurance and sale of its securities except as may be provided herein.

          (f) Transfer or Resale. Each Buyer understands that except as provided
in the Investor Registration Rights Agreement: (i) the Convertible Debentures
have not been and are

                                        3
<PAGE>
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, or (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration requirements; (ii)
any sale of such securities made in reliance on Rule 144 under the 1933 Act (or
a successor rule thereto) ("Rule 144") may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such
securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. The Company reserves the right to place
stop transfer instructions against the shares and certificates for the
Conversion Shares. Additionally, each Buyer understands that the securities of
the Company are not listed on any Stock Exchange in the United States, Canada or
elsewhere; that there is currently no market through which the Committee
Debenture and/or the Conversion Shares may be traded and as such market is
expected to develop.

          (g) Legends. Each Buyer understands that the certificates or other
instruments representing the Convertible Debentures and or the Conversion Shares
shall bear a restrictive legend in substantially the following form (and a stop
transfer order may be placed against transfer of such stock certificates):

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
          STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR
          INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
          OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
          EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
          LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
          REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
          SECURITIES LAWS.

The legend set forth above shall be removed and the Company within two (2)
business days shall issue a certificate without such legend to the holder of the
Conversion Shares upon which it is stamped, if, unless otherwise required by
state securities laws, (i) in connection with a sale transaction, provided the
Conversion Shares are registered under the 1933 Act, or (ii) in connection with
a sale transaction, after such holder provides the Company with an opinion of
counsel, which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be made without
registration under the 1933 Act.

                                        4
<PAGE>
          (h) Authorization, Enforcement. This Agreement and all related
agreements are within Buyer's corporate power and have been duly and validly
authorized, executed and delivered on behalf of such Buyer and each is a valid
and binding agreement of such Buyer enforceable in accordance with its terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies. All necessary corporate action has
been taken with respect to the Buyer to authorize and approve this Agreement and
all the related agreements, and Buyer is under no obligation to obtain any
approval, consent, or other action from any third party in order for Buyer to
consummate the transaction contemplated hereby.

          (i) Receipt of Documents. Each Buyer and his or its counsel has
received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein, the Amended and Restated Security
Agreement, the Investor Registration Rights Agreement, the Escrow Agreement, and
the Irrevocable Transfer Agent Instructions; (ii) all due diligence and other
information necessary to verify the accuracy and completeness of such
representations, warranties and covenants; (iii) answers to all questions each
Buyer submitted to the Company regarding an investment in the Company; and each
Buyer has relied on the information contained therein and has not been furnished
any other documents, literature, memorandum or prospectus. Buyer acknowledges
and agrees that the Company's representations and warranties are limited to
exclusively those expressly stated in this Agreement and exclude any and all
statements made in any other business plan, prospectus, projections, memorandum
or other document or in any oral communication.

          (j) Due Formation of Corporate and Other Buyers. If the Buyer(s) is a
corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and is in good standing in its
jurisdiction of formation and has not been organized for the specific purpose of
purchasing the Convertible Debentures and is not prohibited from doing so.

          (k) No Legal Advice From the Company. Each Buyer acknowledges that it
had the opportunity to review this Agreement and the transactions contemplated
by this Agreement with his or its own legal counsel and investment and tax
advisors. Each Buyer is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

          (l) No Buyer makes any representation or warranty regarding the
Company's ability to successfully become a public company or to have any
registration statement filed by the Company pursuant to the Registration Rights
Agreement or otherwise declared effective by the SEC. The Company has the sole
obligation to make any and all such filings as may be necessary to become a
public company and to have any registration statement declared effective by the
SEC.

                                        5
<PAGE>
     3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company represents and warrants to each of the Buyers that, except as
set forth in the Disclosure Schedule attached as Exhibit "A" hereto:

          (a) Organization and Qualification. The Company and its subsidiaries
(if any) are corporations duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power to own their properties and to carry on their business
as now being conducted. The Company will within 30 days after the Closing become
duly qualified as a foreign corporation to do business and in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, promptly after the Closing and except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries taken as a whole.

          (b) Authorization, Enforcement, Compliance with Other Instruments. (i)
The Company has the requisite corporate power and authority to enter into and
perform this Agreement, the Amended and Restated Security Agreement, the
Investor Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Transfer Agent Instructions, and any related agreements, and to issue the
Convertible Debentures and the Conversion Shares in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the
Amended and Restated Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent Instructions (as
defined herein) and any related agreements by the Company and the consummation
by it of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Convertible Debentures the Conversion Shares and
the reservation for issuance and the issuance of the Conversion Shares issuable
upon conversion or exercise thereof, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders, (iii) this Agreement, the
Amended and Restated Security Agreement, the Investor Registration Rights
Agreement, the Escrow Agreement, the Irrevocable Transfer Agent Instructions and
any related agreements have been duly executed and delivered by the Company,
(iv) this Agreement, the Amended and Restated Security Agreement, the Investor
Registration Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent Instructions and any related agreements constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies. The authorized officer of the Company
executing this Agreement, the Amended and Restated Security Agreement, the
Investor Registration Rights Agreement, the Escrow Agreement, the Irrevocable
Transfer Agent Instructions and any related agreements knows of no reason why
the Company cannot file the registration statement as required under the
Investor Registration Rights Agreement or perform any of the Company's other
obligations under such documents.

          (c) Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 100,000,000 shares of stock, of which (i)
95,000,000 shares are designated as Common Stock, of which 24,545,723 shares are
outstanding, and (ii) 5,000,0000 shares are

                                        6
<PAGE>
designated as Preferred Stock of which 316,000 shares of Series A Preferred
Stock are outstanding shares. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. Except as disclosed in the
Disclosure Schedule no shares of Common Stock are subject to preemptive rights
or any other similar rights or any liens or encumbrances suffered or permitted
by the Company. Except as disclosed in the Disclosure Schedule and immediately
preceding the Closing, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (ii) there
are no outstanding debt securities and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except pursuant
to the Registration Rights Agreement) and (iv) there are no outstanding
registration statements and there are no outstanding comment letters from the
SEC or any other regulatory agency. There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Convertible Debentures as described in this Agreement. The
Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as in effect on
the date hereof (the "By-laws"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the holders
thereof in respect thereto other than stock options issued to employees and
consultants.

          (d) Issuance of Securities. The Convertible Debentures are duly
authorized and, upon issuance in accordance with the terms hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes, liens and charges
with respect to the issue thereof. The Conversion Shares issuable upon
conversion of the Convertible Debentures have been duly authorized and reserved
for issuance. Upon conversion or exercise in accordance with the Convertible
Debentures the Conversion Shares will be duly issued, fully paid and
nonassessable.

          (e) No Conflicts. Except as disclosed in the Disclosure Schedule, the
execution, delivery and performance of this Agreement, the Amended and Restated
Security Agreement, the Investors Registration Rights Agreement, the Escrow
Agreement and the Irrevocable Transfer Agent Instructions by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Certificate of Incorporation, any certificate of
designations of any outstanding series of preferred stock of the Company or the
By-laws or (ii) material conflict with or constitute a materially default (or an
event which with notice or lapse of time or both would become a material
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a material
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) and applicable to the Company
or any of its subsidiaries or by which any property or asset of the Company or
any of its subsidiaries is bound or affected. Except as disclosed in the
Disclosure Schedule, neither the Company nor its subsidiaries is in

                                        7
<PAGE>
violation of any term of or in default under its Certificate of Incorporation or
By-laws or their organizational charter or by-laws, respectively, or material
violation of any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted, and shall not be conducted
in material violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. Except as disclosed in the
Disclosure Schedule, all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company and its subsidiaries are unaware of any facts or circumstance, which
might give rise to any of the foregoing.

          (f) Financial Statements. The Company has supplied the Buyer with the
Company's unaudited balance sheet as of June 30, 2005 and unaudited income
statement for the six (6) month period through and including June 30, 2005 (the
"Financial Statements"). The Financial Statements are accompanied by a letter
from the Company's Chief Executive Officer or Treasurer confirming that the
Financial Statements are true, correct, and complete to the best of his
knowledge. The Financial Statements are subject to adjustments, footnote
disclosure, and the like consistent with year-end audit procedures.

          (g) Absence of Litigation. Except as disclosed in the Disclosure
Schedule, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a material adverse effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the
Disclosure Schedule, have a material adverse effect on the business, operations,
properties, financial condition or results of operations of the Company and its
subsidiaries taken as a whole.

          (h) Acknowledgment Regarding Buyer's Purchase of the Convertible
Debentures. The Company acknowledges and agrees that the Buyer(s) is acting
solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Buyer(s) is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Buyer(s) or any
of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to such Buyer's
purchase of the Convertible Debentures or the Conversion Shares. The Company
further represents to the Buyer that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation by the Company and
its representatives.

                                        8
<PAGE>
          (i) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Convertible Debentures or the Conversion Shares.

          (j) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Convertible Debentures or the Conversion Shares under the 1933 Act or cause this
offering of the Convertible Debentures or the Conversion Shares to be integrated
with prior offerings by the Company for purposes of the 1933 Act.

          (k) Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

          (l) Intellectual Property Rights. The Company and its subsidiaries own
or possess or are currently seeking to develop adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service mark
registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

          (m) Environmental Laws. The Company is, to the best of management's
knowledge, (i) in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received all
material permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its business and (iii) is in material compliance
with all terms and conditions of any such permit, license or approval.

          (n) Title. Any real property and facilities held under lease by the
Company are held by the Company under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company.

                                        9
<PAGE>
          (o) Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be reasonably prudent and customary in the
business in which the Company is engaged. The Company has neither been refused
any insurance coverage sought or applied for nor has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company, taken as a whole.

          (p) Regulatory Permits. The Company possesses or is in the process of
applying for all material certificates, authorizations and permits issued or to
be issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, and the Company has not received any notice
of proceedings relating to the revocation, modification or denial of any such
certificate, authorization or permit.

          (q) Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the
recorded amounts for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

          (r) No Material Adverse Breaches, etc. Except as set forth in the
Disclosure Schedule, neither the Company nor any of its subsidiaries is subject
to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's officers has or
is expected in the future to have a material adverse effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries. Except as set forth in the Disclosure
Schedule, neither the Company nor any of its subsidiaries is in breach of any
contract or agreement which breach, in the judgment of the Company's officers,
has or is expected to have a material adverse effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

          (s) Tax Status. Except as set forth in the Disclosure Schedule, the
Company and each of its subsidiaries has made and filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

                                       10
<PAGE>
          (t) Certain Transactions. Except as set forth in the Disclosure
Schedule, and except for arm's length transactions pursuant to which the Company
makes payments in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties and other than the grant of
stock options disclosed in the Disclosure Schedule, none of the officers,
directors, or employees of the Company is presently a party to any transaction
with the Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

          (u) Fees and Rights of First Refusal. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.

          (v) The Company acknowledges that the Buyer is relying on the
representations and warranties made by the Company hereunder and that such
representations and warranties are a material inducement to the Buyer purchasing
the Convertible Debentures. The Company further acknowledges that without such
representations and warranties of the Company made hereunder, the Buyer would
not enter into this Agreement.

     4.   COVENANTS.

          (a) Best Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

          (b) Form D. The Company agrees to file a Form D with respect to the
Conversion Shares as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Conversion Shares, or obtain an exemption for the
Conversion Shares for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States in all states in which the manual exemption is applicable plus up
to ten (10) additional states as designated by the Buyer, and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date.

          (c) Reporting Status. Commencing on the effectiveness of the
registration statement filed with the SEC pursuant to the Investor Registration
Rights Agreement and until the earlier of (i) the date as of which the Buyer(s)
may sell all of the Conversion Shares without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the date
on which (A) the Buyer(s) shall have sold all except 10% of the Conversion
Shares and (B) $100,000 principal amount of the Convertible Debentures issued
under this Agreement or the Convertible Debentures issued under the Securities
Purchase Agreement dated August 4, 2004 are outstanding (the "Registration
Period"), the Company shall file in a timely manner all reports required to be
filed with the SEC pursuant to the 1934 Act and the regulations of the SEC

                                       11
<PAGE>
thereunder, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.

          (d) Use of Proceeds. The Company will use the proceeds from the sale
of the Convertible Debentures for general corporate and working capital
purposes.

          (e) Reservation of Shares. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the issuance of the Conversion Shares. If at any time the Company does
not have available such shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all of the Conversion Shares of the
Company shall call and hold a special meeting of the shareholders within sixty
(60) days of such occurrence, for the sole purpose of increasing the number of
shares authorized. The Company's management shall recommend to the shareholders
to vote in favor of increasing the number of shares of Common Stock authorized.
Management shall also vote all of its shares in favor of increasing the number
of authorized shares of Common Stock.

          (f) Listings or Quotation. The Company shall, concurrently with the
effectiveness of the registration statement filed with the SEC pursuant to the
Investor Registration Rights Agreement dated August 4, 2004, use its best
efforts to secure the listing or quotation of its Common Stock (including,
without limitation, the Conversion Shares) upon a national securities exchange,
automated quotation system or the Over-The-Counter Bulletin Board ("OTCBB")
maintained by the National Association of Securities Dealers, Inc. The Company
shall maintain the listing or quotation of the Common Stock for so long as the
Investor is the beneficial owner of any Common Stock or Conversion Shares
(whether obtained or to be obtained under this Agreement), the Convertible
Debentures or any other agreement between the Company and the Buyer equivalent
to $100,000 principal amount of the Buyer's original purchase of the Convertible
Debentures. The Company shall use its best efforts to maintain the Common
Stock's authorization for quotation on the OTCBB.

          (g) Fees and Expenses. Except as set forth below, each of the Company
and the Buyer(s) shall pay all costs and expenses incurred by such party in
connection with the negotiation, investigation, preparation, execution and
delivery of this Agreement, the Escrow Agreement, the Investor Registration
Rights Agreement, the Amended and Restated Security Agreement and the
Irrevocable Transfer Agent Instructions. The Buyer(s) shall be entitled to a
commitment fee of Twenty Thousand Dollars ($20,000) paid directly from the gross
proceeds held in escrow.

     The Company shall pay to the Buyer a one-time structuring fee of Ten
Thousand Dollars ($10,000) (the "Structuring Fee") in connection with this
transaction, which shall be paid directly from the gross proceeds of the First
Closing. The structuring fee shall be deemed fully earned on the date hereof.

          (h) Corporate Existence. So long as at least $100,000 principal amount
of the Convertible Debentures issued under this Agreement or the Convertible
Debentures issued under the Securities Purchase Agreement dated August 4, 2004
remain outstanding, the Company shall

                                       12
<PAGE>
not directly or indirectly consummate any merger, reorganization, restructuring,
reverse stock split consolidation, sale of all or substantially all of the
Company's assets or any similar transaction or related transactions (each such
transaction, an "Organizational Change") unless, prior to the consummation an
Organizational Change, the Company obtains the written consent of each Buyer not
to be unreasonably withheld. In any such case, the Company will make appropriate
provision with respect to such holders' rights and interests to insure that the
provisions of this Section 4(h) will thereafter be applicable to the Convertible
Debentures.

          (i) Transactions With Affiliates. So long as at least $100,000
principal amount Convertible Debentures issued under this Agreement or the
Convertible Debentures issued under the Securities Purchase Agreement dated
August 4, 2004 are outstanding, the Company shall not, and shall cause each of
its subsidiaries not to, enter into, amend, modify or supplement, or permit any
subsidiary to enter into, amend, modify or supplement any agreement,
transaction, commitment, or arrangement with any of its or any subsidiary's
officers, directors, person who were officers or directors at any time during
the previous two (2) years, stockholders who beneficially own five percent (5%)
or more of the Common Stock, or Affiliates (as defined below) or with any
individual related by blood, marriage, or adoption to any such individual or
with any entity in which any such entity or individual owns a five percent (5%)
or more beneficial interest (each a "Related Party"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
investment in an Affiliate of the Company, (c) any agreement, transaction,
commitment, or arrangement on an arms-length basis on terms no less favorable
than terms which would have been obtainable from a person other than such
Related Party, (d) any agreement transaction, commitment, or arrangement which
is approved by a majority of the disinterested directors of the Company, for
purposes hereof, any director who is also an officer of the Company or any
subsidiary of the Company shall not be a disinterested director with respect to
any such agreement, transaction, commitment, or arrangement. "Affiliate" for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. "Control" or "controls"
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.

          (j) Transfer Agent. The Company covenants and agrees that, in the
event that the Company's agency relationship with the transfer agent should be
terminated for any reason prior to a date which is two (2) years after the
Closing Date, the Company shall promptly appoint a new transfer agent and shall
require that the new transfer agent execute and agree to be bound by the terms
of the Irrevocable Transfer Agent Instructions (as defined herein).

          (k) Restriction on Issuance of the Capital Stock. So long as at least
$100,000 principal amount Convertible Debentures issued under this Agreement or
the Convertible Debentures issued under the Securities Purchase Agreement dated
August 4, 2004 are outstanding, the Company shall not, without the prior written
consent of the Buyer(s) not to be unreasonably withheld, issue or sell shares of
Common Stock or Preferred Stock (i) without consideration or for a consideration
per share less than the Bid Price of the Common Stock determined immediately
prior to its issuance, (ii) any warrant, option, right, contract, call, or other
security instrument granting the holder thereof, the right to acquire Common
Stock without

                                       13
<PAGE>
consideration or for a consideration less than such Common Stock's Bid Price
value determined immediately prior to it's issuance, (iii) enter into any
security instrument granting the holder a security interest in any and all
assets of the Company (provided that the Company may enter into security
agreements with a third party (the "Third Party") relating to the purchase,
lease, and/or financing of equipment and the Buyer will subordinate the priority
of Buyer's lien as a secured party to the lien such Third Party specific to the
equipment so purchased, leased and/or financed), or (iv) file any registration
statement on Form S-8, except to register securities to be issued under the
Company's 2004 Stock Incentive Plan. So long as at least $100,000 principal
amount of the Convertible Debentures issued under this Agreement or the
Convertible Debentures issued under the Securities Purchase Agreement dated
August 4, 2004 remain outstanding, the Company covenants that it shall not make
any amendments, modifications or other changes to the 2004 Stock Incentive Plan
as in existence on the date hereof, including, without limitation, increasing
the number of shares of capital stock available for issuance thereunder.

          (l) Financial and Accounting. Prior to the effective of the Company's
registration statement on Form SB-2, the Company will have instituted and will
be employing and maintaining customary internal accounting controls and methods
in its business operations sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
or financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, and (iii) the recorded amounts
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

          (m) Use of Proceeds. The Company covenants to the Investor that the
net proceeds to be received by the Company in this transaction shall be used for
general corporate and working capital purposes.

          (n) Deferral of Compensation. The Company covenants and agrees that it
shall (i) not declare or pay bonuses and (ii) defer forty percent (40%) of the
base salary of Chief Executive Officer and Chief Marketing Officer, as detailed
in the Board Consent dated July 19, 2004, until sixty days after the
effectiveness of the Registration Statement filed with the SEC pursuant to the
Registration Rights Agreement dated August 4, 2004. The Company covenants and
agrees that it shall (i) not declare or pay bonuses and (ii) defer twenty
percent (20%) of the base salary of Chief Financial Officer, as detailed in the
Board Consent dated July 19, 2004, until sixty days after the effectiveness of
the Registration Statement filed with the SEC pursuant to the Registration
Rights Agreement dated August 4, 2004. The Company shall obtain letters
confirming such deferral from the officers specified above.

     5.   TRANSFER AGENT INSTRUCTIONS.

     The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer agent irrevocably appointing David Gonzalez, Esq. as its agent for
purpose of having certificates issued, registered in the name of the Buyer(s) or
its respective nominee(s), for the Conversion Shares representing such amounts
of Convertible Debentures as specified from time to time by the Buyer(s) to the
Company upon conversion of the Convertible Debentures, for interest owed

                                       14
<PAGE>
pursuant to the Convertible Debenture, and for any and all Liquidated Damages
(as this term is defined in the Investor Registration Rights Agreement). David
Gonzalez, Esq. shall be paid a cash fee of Fifty Dollars ($50) for every
occasion they act pursuant to the Irrevocable Transfer Agent Instructions. As
long as the Buyer owns at least $100,000 principal amount of the Convertible
Debentures issued under this Agreement or the Convertible Debentures issued
under the Securities Purchase Agreement dated August 4, 2004 the Company shall
not change its transfer agent without the express written consent of the
Buyer(s), not to be unreasonably withheld. Prior to registration of the
Conversion Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(g) hereof (in the case of the Conversion Shares prior
to registration of such shares under the 1933 Act) will be given by the Company
to its transfer agent and that the Conversion Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Investor Registration Rights Agreement.
Nothing in this Section 5 shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of
Conversion Shares. If the Buyer(s) provides the Company with an opinion of
counsel, in form, scope and substance customary for opinions of counsel in
comparable transactions to the effect that registration of a resale by the
Buyer(s) of any of the Conversion Shares is not required under the 1933 Act, the
Company shall within two (2) business days instruct its transfer agent to issue
one or more certificates in such name and in such denominations as specified by
the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5, that the Buyer(s)
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

     6.   CONDITIONS TO THE COMPANY'S OBLIGATION TO SELLER.

     The obligation of the Company hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing Dates, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:

          (a) Each Buyer shall have executed this Agreement, the Amended and
Restated Security Agreement, the Escrow Agreement and the Investor Registration
Rights Agreement and the Irrevocable Transfer Agent Instructions and delivered
the same to the Company.

          (b) The Buyer(s) shall have delivered to the Escrow Agent the Purchase
Price for Convertible Debentures in respective amounts as set forth next to each
Buyer as outlined on Schedule I attached hereto and the Escrow Agent shall have
delivered the net proceeds to the Company by wire transfer of immediately
available U.S. funds pursuant to the wire instructions provided by the Company.

                                       15
<PAGE>
          (c) The representations and warranties of the Buyer(s) shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer(s) shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer(s) at or prior to the Closing Date.

     7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

     The obligation of the Buyer(s) hereunder to purchase the Convertible
Debentures at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer(s) at
any time in its sole discretion:

          (a) The Company shall have executed this Agreement, the Amended and
Restated Security Agreement, the Convertible Debenture, the Escrow Agreement,
the Irrevocable Transfer Instructions and the Investor Registration Rights
Agreement, and delivered the same to the Buyer(s).

          (b) The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. If requested by
the Buyer, the Buyer shall have received a certificate, executed by the
President of the Company, dated as of the Closing Date, to the foregoing effect
and an update as of the Closing Date regarding the representation contained in
Section 3(c) above.

          (c) The Company shall have executed and delivered to the Buyer(s) the
Convertible Debentures in the respective amounts set forth opposite each
Buyer(s) name on Schedule I attached hereto.

          (d) The Buyer(s) shall have received an opinion of counsel in a form
satisfactory to the Buyer(s).

          (e) The Company shall have provided to the Buyer(s) a certificate of
good standing from the Secretary of State of Delaware.

          (f) As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Convertible Debentures, shares of Common Stock to effect the
conversion of all of the Conversion Shares then outstanding.

                                       16
<PAGE>
          (g) The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company's transfer agent been engaged.

     8. INDEMNIFICATION.

          (a) In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Convertible Debentures and the Conversion Shares
hereunder, and in addition to all of the Company's other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless the
Buyer(s) and each other holder of the Convertible Debentures and the Conversion
Shares, and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Buyer Indemnitees") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Buyer Indemnitee is a party to the action for
which indemnification hereunder is sought), and including reasonable attorneys'
fees and disbursements (the "Indemnified Liabilities"), incurred by the Buyer
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Convertible Debentures or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the
Indemnities, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Convertible
Debentures or the status of the Buyer or holder of the Convertible Debentures
the Conversion Shares, as a Buyer of Convertible Debentures in the Company. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities, which is permissible
under applicable law. This indemnification shall not apply to any Indemnified
Liabilities arising out of the willful or reckless actions or inactions of any
Buyer Indemnitee.

          (b) In consideration of the Company's execution and delivery of this
Agreement, and in addition to all of the Buyer's other obligations under this
Agreement, the Buyer shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Company Indemnitees") from
and against any and all Indemnified Liabilities incurred by the Indemnitees or
any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Buyer(s) in this Agreement, the Convertible Debentures or the Investor
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby executed by the Buyer, (b) any breach of any
covenant, agreement or obligation of the Buyer(s) contained in this Agreement,
the Investor Registration Rights Agreement or any other certificate, instrument
or document contemplated hereby or

                                       17
<PAGE>
thereby executed by the Buyer, or (c) any cause of action, suit or claim brought
or made against such Company Indemnitee based on material misrepresentations or
due to a material breach and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement, the Investor
Registration Rights Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnities. To the extent that
the foregoing undertaking by each Buyer may be unenforceable for any reason,
each Buyer shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law. This indemnification shall not apply to any Indemnified Liabilities arising
out of the willful or reckless actions or inactions of any Company Indemnitee.

     9. GOVERNING LAW: MISCELLANEOUS.

          (a) Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New Jersey without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard exclusively in Hudson County, New Jersey, and
expressly consent to the jurisdiction and venue of the Superior Court of New
Jersey, sitting in Hudson County and the United States District Court for the
District of New Jersey sitting in Newark, New Jersey for the adjudication of any
civil action asserted pursuant to this Paragraph.

          (b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.

          (c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

          (d) Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

          (e) Entire Agreement, Amendments. This Agreement supersedes all other
prior oral or written agreements between the Buyer(s), the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.

          (f) Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will

                                       18
<PAGE>
be deemed to have been delivered (i) upon receipt, when delivered personally;
(ii) upon confirmation of receipt, when sent by facsimile; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested, or (iv) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

If to the Company, to:          U.S. Helicopter Corporation
                                Downtown Manhattan Heliport
                                Pier 6, East River
                                New York, NY 10004
                                Attention: John G. Murphy
                                Telephone: (212) 248-2002
                                Facsimile: (212) 248-0940

With a copy to:                 Gallagher, Briody & Butler
                                Princeton Forrestal Village
                                155 Village Blvd., Suite 201
                                Princeton, NJ 08540
                                Attention: Thomas P. Gallagher, Esq.
                                Telephone: (609) 452-6000
                                Facsimile: (609) 452-0090

If to the Transfer Agent, to:   StockTrans, Inc.
                                7 E Lancaster Avenue
                                Ardmore, PA 19003
                                Telephone: 610-649-7300
                                Facsimile: 610-649-7302

     If to the Buyer(s), to its address and facsimile number on Schedule I, with
copies to the Buyer's counsel as set forth on Schedule I. Each party shall
provide five (5) days' prior written notice to the other party of any change in
address or facsimile number.

          (g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto.

          (h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

          (i) Survival. Unless this Agreement is terminated under Section 9(l),
the representations and warranties of the Company and the Buyer(s) contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive the
Closing for a period of two (2) years following the date

                                       19
<PAGE>
on which the Convertible Debentures are converted in full. The Buyer(s) shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

          (j) Publicity. The Company and the Buyer(s) shall have the right to
approve, before issuance any press release or any other public statement with
respect to the transactions contemplated hereby made by any party; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer(s), to issue any press release or other public disclosure with respect to
such transactions required under applicable securities or other laws or
regulations (the Company shall use its best efforts to consult the Buyer(s) in
connection with any such press release or other public disclosure prior to its
release and Buyer(s) shall be provided with a copy thereof upon release
thereof).

          (k) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

          (l) Termination. In the event that the Closing shall not have occurred
with respect to the Buyers on or before five (5) business days from the date
hereof due to the Company's or the Buyer's failure to satisfy the conditions set
forth in Sections 6 and 7 above (and the non-breaching party's failure to waive
such unsatisfied condition(s)), the non-breaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party.

          (m) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>
     IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.

                                        COMPANY:
                                        U.S. HELICOPTER CORPORATION

                                        By: /s/ John G. Murphy
                                            ------------------------------------
                                        Name: John G. Murphy
                                        Title: President & CEO

                                        THE BUYER'S(S') SIGNATURES ARE CONTAINED
                                        ON SCHEDULE I HERETO

                                       21
<PAGE>
                                    EXHIBIT A

                               DISCLOSURE SCHEDULE

a. Organization and Qualification: None.

b. Authorization, Enforcement, Compliance with Other Instruments: None.

c. Capitalization:

     1. Options: The Company has adopted a 2004 Stock Incentive Plan and has
     reserved the right to issue and sell up to 3,700,000 million shares of
     common stock under such plan. To date, the Company has authorized the
     following options, all of which are exercisable at $0.50 per share:

<TABLE>
<CAPTION>
Name               Options
----               -------
<S>                <C>
George Mehm        231,000
Dean Borgman       300,000
Terence Dennison   211,000
Sandy Goldstein     70,000
John Galligan       70,000
</TABLE>

     2. Warrants: The Company conducted a private placement (the "Private
     Placement") from November through December, 2004 wherein the Company issued
     warrants to 20 purchasers to purchase a total of 126,400 shares of the
     Company's common stock which are exercisable upon conversion of the Series
     A Preferred Stock issued to subscribers in the Private Placement. A total
     of 63,200 warrants have exercise prices of 125% of the conversion price of
     the Series A Preferred Stock, and the remaining 63,200 warrants an exercise
     price of 150% of the conversion price of the Series A Preferred Stock. The
     126,400 warrants issued in connection with the Private Placement constitute
     all warrants issued by the Company to date.

          Preferred Stock: Shares of the Company's Series A Preferred Stock
     issued in the Private Placement are convertible into the Company's common
     stock at an exercise price equal to 80% of the average closing bid price of
     the Company's common stock on the OTC-BB for the 20 trading days
     immediately preceding the day upon which the Company receives a notice of
     conversion from the Preferred Stockholder. In the event that the Company's
     shares are not traded on the OTC-BB, the conversion price shall be equal to
     80% of the average bid price of the Company's common stock posted in the
     Pink Sheets for the 20 trading days immediately preceding the day upon
     which the Company receives a conversion notice from the Preferred
     Stockholder. In the event that the Company's shares are not traded on the
     OTC-BB or on the Pink Sheets, the conversion price shall be equal to 80% of
     the fair market value of the Company's common stock on

                                  SCHEDULE I-1
<PAGE>
     the date upon which the Company receives the notice of conversion from the
     Preferred Stockholder.

     3. Rights Convertible Into Common Stock: The Buyer holds an Amended and
     Restated Secured Debenture (the "Convertible Debenture") dated April 8,
     2005 in the principal amount of $1,335,424, of which up to 10% may be
     converted into shares of the Company's common stock at a price of $0.20 per
     share. Upon the occurrence of an Event of Default, as defined in the
     Convertible Debenture, the Buyer may convert all sums due and owing under
     the Convertible Debenture without regard to the aforementioned 10%
     limitation.

     4. Understandings/Arrangements for which the Company is Bound to Issue
     Common Stock: The Company and the Buyer are parties to an Amended and
     Restated Standby Equity Distribution Agreement dated April 8, 2005 (the
     "SEDA"). Pursuant to the SEDA, the Company may, at its discretion,
     periodically sell to the Buyer shares of common stock for a total purchase
     price of up to $11.0 million.

     5. Outstanding Debt Securities: See the description of the Convertible
     Debenture (#3 above).

     6. Agreements to Register the Sale of the Company's Securities:

          A. Convertible Debenture: The Company has agreed to register the
          shares of common stock issuable upon conversion of the Convertible
          Debenture (see #3 above) pursuant to an Investor Registration Rights
          Agreement dated August 4, 2004. The Company filed a registration
          statement with the SEC on April 22, 2005 (together with its subsequent
          amendments, the "First Registration Statement") which includes the
          registration of up to 7,344,830 shares issuable upon conversion of the
          Convertible Debenture. The First Registration Statement was
          subsequently amended on June 27, 2005, July 21, 2005 and August 17,
          2005.

          B. SEDA: The Company has agreed to register the shares of common stock
          issuable pursuant to the SEDA (see #4 above) pursuant to a
          Registration Rights Agreement dated August 4, 2004. The Company
          intends to file a registration statement (the "Second Registration
          Statement") for the resale of these shares by the Buyer after the
          effectiveness of the First Registration Statement. The Company has
          also issued a total of 2,472,527 shares originally issued to the Buyer
          as a commitment fee pursuant to the SEDA. Of the 2,472,527 shares
          originally issued to the Buyer for payment of such commitment fee, the
          Buyer subsequently transferred a total of 494,505 shares to Amir
          Elbaz, and a total of 247,253 shares to Troy Rillo. All 2,472,527
          shares originally issued to the Buyer as a commitment fee under the
          SEDA are included in the First Registration Statement.

          C. 3B Group, Inc.: The Company has agreed to register 773,196 shares
          held by 3B Group, Inc. received in consideration of its efforts in
          assisting the

                                        2
<PAGE>
          Company to raise capital and to induce the Buyer to make an investment
          in the Company. These shares are included in the First Registration
          Statement.

          D. Newbridge Securities Corporation: The Company has agreed to
          register $10,000 worth of common stock to be issued to Newbridge in
          consideration of its acting as placement agent for the Company's
          transaction with the Buyer in August, 2004, with the number of shares
          to be determined on the first day which the Company's shares are
          publicly traded. The Company anticipates including such shares in the
          Second Registration Statement.

          E. Private Placement Investors: The Company has agreed to register the
          common stock issuable upon conversion of the Series A Preferred Stock
          and the warrants acquired by investors in the Private Placement (see
          #2 above). The Company anticipates including such shares in the Second
          Registration Statement.

          F. North Coast Securities Corporation Warrants: The Company has agreed
          to register the common stock issuable upon conversion of certain
          warrants issued to North Coast Securities Corporation to purchase a
          total of 279,600 shares, of which 250,000 warrants were issued for
          services rendered pursuant to a Financial Advisory and Investment
          Banking Agreement, and 29,600 warrants were issued as partial
          consideration for North Coast acting as placement agent for the
          Private Placement. The Company anticipates including such shares in
          the Second Registration Statement.

     7. Outstanding Registration Statements: The Company filed the First
     Registration Statement on April 22, 2005 (see #6(a) above), which was
     amended on June 27, 2005, July 21, 2005 and August 17, 2005. The Company
     has responded to all comment letters to date received from the SEC with
     respect to the First Registration Statement; such comment letters have been
     provided to the Buyer.

d. Issuance of Securities: None.

e. No Conflicts: None.

f. Financial Statements: None.

g. Absence of Litigation: None.

h. Acknowledgement Regarding Buyer's Purchase of the Convertible Debentures:
None.

i. No General Solicitation: None.

j. No Integrated Offering: None.

k. Employee Relations: None.

                                        3
<PAGE>
l. Intellectual Property Rights: The Company is aware that third parties are
using the words, or variations on, "U.S." and "Helicopter". None are known to
the Company to be using such words in the same style or format as the Company.
The Company may conduct its business in the future under a trade name other than
"U.S. Helicopter".

m. Environmental Laws: None.

n. Title: None.

o. Insurance: None.

p. Regulatory Permits: None.

q. Internal Accounting Controls: None.

r. No Material Adverse Breaches, etc.: None.

s. Tax Status: None.

t. Certain Transactions: See disclosures set forth in the schedules to the
August 4, 2004 Securities Purchase Agreement (the "8/4/04 SPA") between the
Company and the Buyer. In addition:

     1. The Company has a letter of employment with Terence O. Dennison (Chief
     Operating Officer; Base Salary of $90,000; 211,000 options; bonus
     eligibility same as in 8/4/04 SPA's disclosures).

     2. Stock options issued (see c(1) above).

u. Fees and Rights of First Refusal: None.

v. None.

                                        4
<PAGE>
                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                                                    ADDRESS/FACSIMILE
            NAME                        SIGNATURE                    NUMBER OF BUYER          AMOUNT OF SUBSCRIPTION
----------------------------   ---------------------------   ------------------------------   ----------------------
<S>                            <C>                           <C>                              <C>
Cornell Capital Partners, LP   By: Yorkville Advisors, LLC   101 Hudson Street - Suite 3700          $220,000
                               Its: General Partner          Jersey City, NJ 07303
                                                             Facsimile: (201) 985-8266

                               By: /s/ Mark A. Angelo        With a copy to:
                                   -----------------------   Cornell Capital Partners, LP
                               Name: Mark A. Angelo          101 Hudson Street, Suite 3700
                               Its: Portfolio Manager        Jersey City, NJ 07303
                                                             Attention: Troy J. Rillo, Esq.
                                                             Facsimile: (201) 985-8266
</TABLE>

                                        5

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