Document:

exv10w28

 

Exhibit 10.28

SENIOR EXECUTIVE EMPLOYMENT AGREEMENT

(FOR LEVEL 1 EXECUTIVES)

     AGREEMENT, made and entered into as of the 1st day of February 2008 by and between IKON Office
Solutions, Inc., an Ohio corporation with its principal office located at 70 Valley Stream Parkway,
Malvern, Pennsylvania 19355 (together with its successors and assigns permitted under this
Agreement, the “Company”) and Jeffrey Hickling, who currently resides at 40 Abbey Rd, Easton, CT
06612-1075 (the “Executive”);

W I T N E S S E T H:

     WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment;

     WHEREAS, the Executive desires to accept such employment with the Company, subject to the
terms and provisions of this Employment Agreement;

     NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the Company
and the Executive (together, the “Parties”) agree as follows:

     1. Definitions.

          (A) “Affiliate” of a Person shall mean a Person who directly or indirectly controls, is
controlled by, or is under common control with, the Person specified.

          (B) “Agreement” shall mean this Employment Agreement, which includes for all purposes its
Exhibits hereto.

          (C) “Base Salary” shall mean the salary provided for in Section 4 or any increased salary
granted to the Executive pursuant to Section 4.

          (D) “Board” shall mean the Board of Directors of the Company.

          (E) “Cause” shall mean:

               (1) Executive fails to comply with any material written Company policy, as the same may from
time to time be adopted and/or modified by the Company, including, but not limited to, the
Company’s Code of Ethics;

               (2) Executive breaches his/her material obligations under the terms of this Agreement; or

               (3) the Executive has committed an act of dishonesty, moral turpitude or theft against the
Company or has breached his/her duties of loyalty to the Company.

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          (F) “Change in Control” shall mean the occurrence of any of the following events:

               (1) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act)
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of IKON representing more than 35% of the voting power of the then
outstanding securities of IKON; provided that a Change in Control shall not be deemed to occur as a
result of a transaction in which IKON becomes a subsidiary of another corporation and in which the
shareholders of IKON, immediately prior to the transaction, will beneficially own, immediately
after the transaction, shares entitling such shareholders to more than 65% of all votes to which
all shareholders of the parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a separate class vote);

               (2) The consummation of (A) a merger or consolidation of IKON with another corporation where
the shareholders of IKON, immediately prior to the merger or consolidation, will not beneficially
own, immediately after the merger or consolidation, shares entitling such shareholders to more than
50% of all votes to which all shareholders of the surviving corporation would be entitled in the
election of directors (without consideration of the rights of any class of stock to elect directors
by a separate class vote), or (B) a sale or other disposition of all or substantially all of the
assets of IKON;

               (3) During any twelve month period after the Effective Date, individuals who at the beginning
of such period constituted the Board cease for any reason to constitute a majority thereof, unless
the election, or the nomination for election by IKON’s shareholders, of at least a majority of the
directors who were not directors at the beginning of such period, was approved by a vote of at
least two-thirds of the directors then in office at the time of such election or nomination who
either (i) were directors at the beginning of such period or (ii) whose appointment, election or
nomination for election was previously so approved;

          (G) “Claim” shall mean any claim, demand, request, investigation, dispute, controversy,
threat, discovery request, or request for testimony or information.

          (H) “Committee” shall mean the Human Resources Committee of the Board;

          (I) “Common Stock” shall mean common stock of the Company.

          (J) “Constructive Termination Without Cause” shall mean a termination by the Executive of
his/her employment hereunder on 30 days’ written notice given by him/her to the Company following
the occurrence, without his/her prior written consent, of any of the following events, unless the
Company shall have fully cured all grounds for such termination within 15 days after the Executive
gives notice thereof:

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               (1) any reduction in his/her then current Base Salary or in his/her annual incentive bonus
award opportunity set forth herein;

               (2) any material breach of any of the Company’s obligations, representations or warranties in
this Agreement;

               (3) any material diminution in his/her duties or the assignment to him/her of duties that
materially impair his/her ability to perform his/her duties;

               (4) following any Change in Control, any relocation of the Company’s principal office, or of
his/her own office as assigned to him/her by the Company, to a location more than 50 miles from
Malvern, Pennsylvania;

               (5) following any Change in Control, any failure by the Company to continue in effect any
compensation plan in which the Executive participated immediately prior to such Change in Control
and which is material to the Executive’s total compensation, including but not limited to the
Company’s stock option, incentive compensation, deferred compensation, stock purchase, bonus and
other plans or any substitute plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to
such plan, or any failure by the Company to continue the Executive’s participation therein (or in
such substitute or alternative plan) on a basis no less favorable to the Executive, both in terms
of the amount of benefits provided and the level of the Executive’s participation relative to other
participants, as existed immediately prior to such Change in Control;

               (6) following any Change in Control, any failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the Executive under any of the
Company’s pension, life insurance, medical, health and accident, or disability plans in which the
Executive was participating immediately prior to such Change in Control, the taking of any action
by the Company which would directly or indirectly materially reduce any of such benefits or deprive
the Executive of any perquisite enjoyed by the Executive at the time of such Change in Control, or
the failure by the Company to maintain the vacation allowance provided in Section 7 with respect to
the Executive;

               (7) following any Change in Control, any failure to elect Executive as President, IKON U.S. of
the Person acquiring the Company with duties and responsibilities of comparable scope to
Executive’s duties and responsibilities immediately prior to such Change in Control; or

               (8) the failure of the Company to obtain the assumption in writing of its obligation to
perform this Agreement by any successor to all or substantially all of the assets of the Company
within 15 days after a merger, consolidation, sale or similar transaction.

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          (K) “Disability” shall mean Total Disability as defined in the Company’s Long-Term Disability
Plan, as amended from time to time.

          (L) “Effective Date” shall mean February 1, 2008.

          (M) “Person” shall mean any individual, corporation, partnership, limited liability company,
joint venture, trust, estate, board, committee, agency, body, employee benefit plan, or other
person or entity.

          (N) “Potential Change in Control” shall mean the occurrence of any of the following events:

               (1) the Company enters into an agreement, the consummation of which will result in the
occurrence of a Change in Control;

               (2) the Company or any Person publicly announces an intention to take or to consider taking
actions which, if consummated, will constitute a Change in Control; or

               (3) the Board adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.

          (O) “Proceeding” shall mean any threatened or actual action, suit or proceeding, whether
civil, criminal, administrative, investigative, appellate or other.

          (P) “Pro-Rata” shall mean a fraction, the numerator of which is the number of days that the
Executive was employed in the applicable performance period (a fiscal year in the case of an annual
incentive bonus award) and the denominator of which shall be the number of days in the applicable
performance period.

          (Q) “Term of Employment” shall mean the period specified in Section 2.

          (R) “Termination Date” shall mean the date on which the Executive’s employment with the
Company terminates.

          (S) “Voting Stock” shall mean issued and outstanding capital stock or other securities of any
class or classes having general voting power, under ordinary circumstances in the absence of
contingencies, to elect, in the case of a corporation, the directors of such corporation and, in
the case of any other entity, the corresponding governing Person(s).

     2. Term of Agreement.

          The Company hereby agrees to continue to employ the Executive under this Agreement, and the
Executive hereby accepts such continued employment, for the Term of Agreement. The initial Term of
Agreement shall commence as of the Effective Date and

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shall end on the second anniversary thereof. Thereafter, the Term of Agreement shall be
automatically extended for additional one-year periods (“extension periods”) unless either party
provides notice of non-renewal at least sixty (60) days prior to the expiration of the Initial Term
or extension period. Termination of Executive’s employment as a result of non-renewal by the
Company shall be treated as a termination subject to the provisions of Section 8(D) (Termination
without Cause) of this Agreement. Notice of non-renewal by Executive shall be treated as a
termination subject to the provisions of Section 8(G) (Voluntary Termination) of this Agreement.
Notwithstanding the foregoing, the Term of Agreement may be terminated at any time prior to the
expiration of the Initial Term and/or any extension period in accordance with the provisions of
Section 8.

     3. Positions, Duties and Responsibilities.

          (A) During the Term of Agreement, the Executive shall serve as President, IKON U.S. of the
Company, or shall hold such other title and perform such other functions and duties as shall be
determined by the Chief Executive Officer.

          (B) During the Term of Agreement, Executive will (1) devote substantial and full-time
attention and energies to the business of the Company, particularly its US sales, services and
operations functions, and diligently perform all duties incident to his/her employment; (2) use
his/her best efforts to promote the interests and goodwill of the Company; and (3) perform such
duties as may be assigned to him/her by the CEO.

     4. Base Salary.

          Commencing as of the Effective Date, the Executive shall be paid an annualized Base Salary of
$530,000, payable in accordance with the regular payroll practices of the Company. The Base Salary
shall be reviewed no less frequently than annually for increase in the discretion of the CEO and,
if applicable, the Board.

     5. Annual Incentive Award Opportunity.

          The Executive shall be eligible for an annual incentive bonus award opportunity from the
Company in respect of each fiscal year of the Company that ends during the Term of Agreement.
He/she shall be eligible for an annual incentive bonus award opportunity of no less than sixty-five
percent (65%) of his/her eligible base salary earnings for the fiscal year, the achievement of
which shall be based upon the performance of the Company and the performance of the Executive;
provided however that for the Company’s fiscal year 2008 (“FY2008”), this annual
incentive bonus opportunity shall be prorated as of February 1, 2008. In addition, in the sole
discretion of the CEO, the Executive may be eligible for an additional annual overachievement bonus
award opportunity. To the extent earned, the Executive shall be paid his/her annual incentive
awards at the same time that other senior-level executives receive their incentive awards.
Notwithstanding anything set forth in this paragraph, however, for the Company’s 2008
fiscal year only, Executive shall be eligible for (a) a prorated annual incentive bonus award
opportunity of not less than forty five-and-a-half percent (45.5%) of his eligible base salary
earnings for the time period

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between the Effective Date and September 30, 2008 , the achievement of which shall be based
upon the performance of the Company and the performance of the Executive, and (b) a prorated annual
incentive bonus award opportunity of not less than forty two percent (42%) of his eligible base
salary earnings for the time period between October 1, 2007 and the Effective Date, the achievement
of which shall be based upon the performance of the Company and the performance of the Executive.

     6. Stock Ownership Guidelines.

          In conjunction with your promotion to President, IKON U.S., and subject to the approval of the
Company’s Board of Directors, you will receive a one-time grant of stock options and restricted
stock units with a value of approximately $250,000, with such value being determined by the Company
in its sole discretion (“Promotion Grant”). The terms and conditions of the Promotion Grant will
be set forth in the applicable restricted stock unit and stock option agreements that will be
issued in conjunctions with the Promotion Grant. You will continue to be subject to IKON’s Stock
Ownership Guidelines as they may be amended from time to time.

     7. Other Benefits.

          (A) Other Executive Compensation Plans. During the Term of Agreement, the Executive
shall be entitled to participate in all compensation plans and programs that are, from time to
time, made generally available to senior executives of the Company, including, without limitation,
the Executive Deferred Compensation Plan. Nothing in this Agreement shall require the Company to
maintain or shall prevent the Company from amending or terminating any compensation plans or
programs from time to time as the Company, in its sole discretion, deems appropriate.

          (B) Employee Benefits. During the Term of Agreement, the Executive shall participate
in all employee benefit plans and programs made available generally to the Company’s senior
executives, including, without limitation, pension, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term disability and life insurance plans or
programs, accidental death and dismemberment protection, travel accident insurance, and any other
employee welfare or retirement benefit plans or programs that may be sponsored by the Company from
time to time, including any plans or programs that supplement the above-listed types of plans or
programs, whether funded or unfunded. Nothing in this Agreement shall require the Company to
maintain or shall prevent the Company from amending or terminating any employee benefit plans or
programs from time to time as the Company, in its sole discretion, deems appropriate.

          (C) Relocation Benefits. In connection with Executive’s plans to relocate his
residence to the Malvern, Pennsylvania area, Executive will be eligible to elect between the
following relocation benefit packages: either (i) a one time $100,000 taxable relocation bonus
(“Relocation Bonus”) or (ii) standard Level 1 benefits under IKON’s Relocation Program, Executive
Addendum and Tier One Policy (“Standard Relocation Benefits”), as such program may be amended from
time to time. Executive’s eligibility for these relocation

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benefit packages will be governed by the terms of the Relocation Payback Agreement Executive
executed on March 21, 2005 (which is hereby incorporated by reference in its entirety) and his
compliance with the terms of IKON’s Relocation Program. Executive will have until September 30,
2008 to choose between the two relocation benefit options set forth above, provided that he remains
employed with the Company through that time. In the event Executive does not relocate his
residence to the Malvern, Pennsylvania area by December 31, 2008, for whatever reason, he will not
be entitled to either the Relocation Bonus or Standard Relocation Benefits.

          (D) Expenses. The Executive is authorized to incur reasonable expenses in carrying
out his/her duties and responsibilities hereunder and the Company shall promptly reimburse him/her
for all such expenses, subject to documentation in accordance with reasonable policies of the
Company.

          (E) Vacation. Executive shall be entitled to four weeks paid vacation per year.

     8. Termination of Employment.

          (A) Termination Due to Death. In the event that the Executive’s employment hereunder
is terminated due to his/her death, his/her estate or his/her beneficiaries (as the case may be)
shall be entitled to:

               (1) Base Salary through the end of the month in which his/her death occurs;

               (2) a Pro-Rata annual incentive bonus award for the fiscal year in which his/her death occurs,
based on the Executive’s annual incentive bonus award opportunity for the year of death (excluding
any overachievement bonus award opportunity), payable in a lump sum promptly following his/her
death, regardless of the Executive’s and Company’s performance during such fiscal year;

               (3) the continued right to exercise each outstanding stock option for a period of 12 months
(provided, however, that no options can be exercised beyond their expiration date), all such
options to become fully vested and exercisable as of the date of his/her death, and the immediate
vesting of all shares of restricted stock as of the date of his/her death;

               (4) immediate vesting in the Company’s Retirement Savings Plan (or any successor 401(k) plan),
pension plan, supplemental retirement plan and deferred compensation plans; and

               (5) the benefits described in Section 8(H)(1).

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          (B) Termination Due to Disability. In the event that the Executive’s employment
hereunder is terminated due to Disability, he/she shall be entitled to the following:

               (1) periodic disability payments in accordance with the Company’s Long-Term Disability Plan;

               (2) Base Salary through the end of the month in which the Termination Date occurs;

               (3) a Pro-Rata annual incentive bonus award for the fiscal year in which his/her Termination
Date occurs, based on the Executive’s annual incentive bonus award opportunity for such fiscal year
(excluding any overachievement bonus award opportunity), payable in a lump sum promptly following
the Termination Date, regardless of the Executive’s and Company’s performance during such fiscal
year;

               (4) the continued right to exercise each outstanding stock option for a period of 12 months
(provided, however, that no options can be exercised beyond their expiration date), all such
options to become fully vested and exercisable as of the Termination Date, and the immediate
vesting of all shares of restricted stock as of the Termination Date; and

               (5) continued participation, for a period of two years from the Termination Date, in all
medical, dental, vision, hospitalization, disability and life insurance coverages and in all other
employee welfare benefit plans, programs and arrangements in which he/she was participating on the
date on which his/her employment terminates, on terms and conditions that are no less favorable to
him/her than those that applied on such date, and with COBRA benefits commencing thereafter;
provided that the Company’s obligation under this Section 8(B)(5) shall be reduced
to the extent that equivalent coverages and benefits (determined on a coverage-by-coverage and
benefit-by-benefit basis) are provided under the plans, programs or arrangements of a subsequent
employer; and provided further that to the extent coverage detailed in this
subsection is longer than the period Executive would be entitled to COBRA coverage, commencing with
the first month immediately following the expiration of the period the COBRA coverage would be
available, the Company shall provide to Executive such coverage or reimburse to Executive the costs
incurred by him in obtaining the above-described benefits in accordance with the requirements of
Treas. Reg. §1.409A-3(i)(1)(iv) for the remaining period in which such continued coverage is
required to be provided pursuant to this clause so long as the coverage for which Executive shall
continue to be eligible for under this subsection shall be made available to Executive on the same
terms and conditions as are offered to continuing executives; and

               (6) immediate vesting in the Company’s Retirement Savings Plan (or any successor 401(k) plan),
pension plan, supplemental retirement plan and deferred compensation plans; and

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               (7) the benefits described in Section 8(H)(1).

               No termination of the Executive’s employment for Disability shall be effective until the
Company first gives 15 days written notice of such termination to Executive.

          (C) Termination by the Company for Cause.

               (1) No termination of the Executive’s employment hereunder by the Company for Cause shall be
effective unless the provisions of this Section 8(C)(1) shall have been complied with. The
Executive shall be given written notice by the CEO of the intention to terminate him/her for Cause,
such notice to state in detail the particular circumstances that constitute the grounds on which
the proposed termination for Cause is based. Except in the case of a termination for Cause
pursuant to Section 1(E)(1) or Section 1(E)(3) which will be effective, in the sole discretion of
the CEO, on the date set forth in the notice, the Executive shall have 15 days after receiving such
notice in which to cure such grounds, to the extent such cure is possible. If he/she fails to cure
such grounds, his/her employment hereunder shall thereupon be terminated for Cause.

               (2) In the event that the Executive’s employment hereunder is terminated by the Company
for Cause in accordance with Section 8(C)(1), he/she shall be entitled to:

                    (A) 30 days to exercise any stock option which is vested and exercisable on the Termination
Date (provided, however, that no options shall be exercisable after their expiration date). All
stock options which are not vested and exercisable as of the Termination Date will be forfeited,
and all restricted stock which has not vested and been distributed as of the Termination Date will
be forfeited; and

                    (B) the benefits described in Section 8(H)(1).

          (D) Termination Without Cause. In the event that the Executive’s employment hereunder
is terminated by the Company without Cause and Sections 8(A) (death), (B) (disability) and (F)
(change in control) do not apply, and provided Executive executes a full release satisfactory to
the Company, then the Executive shall be entitled to:

               (1) Base Salary for a two-year period ending on the second anniversary of the Termination
Date, payable as provided in Section 4;

               (2) a Pro-Rata annual incentive award for the fiscal year in which the Termination Date
occurs, based on the Executive’s annual bonus opportunity for such fiscal year (excluding any
overachievement bonus opportunity), payable in a lump sum promptly following the Termination Date,
regardless of the Executive’s and Company’s performance during such fiscal year;

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               (3) an amount equal to twice the Executive’s annual bonus opportunity for the year of
termination (excluding any overachievement bonus opportunity), payable in equal installments over
the two-year period ending on the second anniversary of the Termination Date;

               (4) the continued right to exercise any vested and exercisable stock option for a minimum
period of 12 months from the Termination Date (provided, however, that no options can be exercised
after their expiration date). During the 12-month period following the Termination Date, all
unvested stock options will continue to vest as if the Executive were still employed with the
Company. All stock options which are not vested or exercised as of 12 months following the
Termination Date will be forfeited. In addition, all restricted stock which has not been
distributed as of the Termination Date will be forfeited;

               (5) continued participation, through the second anniversary of the Termination Date, in all
medical, dental, vision, hospitalization, disability and life insurance coverages and in all other
employee welfare benefit plans, programs and arrangements in which he/she or his/her family members
were participating on such date, on terms and conditions that are no less favorable to him/her than
those that applied on such date and with COBRA benefits commencing thereafter; provided
that the Company’s obligation under this Section 8(D)(5) shall be reduced to the extent
that equivalent coverages and benefits (determined on a coverage-by-coverage and benefit-by-benefit
basis) are provided under the plans, programs or arrangements of a subsequent employer; and
provided further that to the extent coverage detailed in this subsection is longer
than the period Executive would be entitled to COBRA coverage, commencing with the first month
immediately following the expiration of the period the COBRA coverage would be available, the
Company shall provide to Executive such coverage or reimburse to Executive the costs incurred by
him in obtaining the above-described benefits in accordance with the requirements of Treas. Reg.
§1.409A-3(i)(1)(iv) for the remaining period in which such continued coverage is required to be
provided pursuant to this clause so long as the coverage for which Executive shall continue to be
eligible for under this subsection shall be made available to Executive on the same terms and
conditions as are offered to continuing executives; and

               (6) immediate vesting in the Company’s Retirement Savings Plan (or any successor 401(k) plan),
pension plan, supplemental retirement plan, and deferred compensation plans with the exception of
any Matching Contributions (as that term is defined in the IKON Office Solutions, Inc. Executive
Deferred Compensation Plan, (“Executive Plan”)) made for the benefit of Executive by IKON pursuant
to the express terms of the Executive Plan, as amended from time to time; and

               (7) the benefits described in Section 8(H)(1).

          (E) Constructive Termination Without Cause. In the event that: (i) a Constructive
Termination Without Cause occurs and (ii) Section 8(F) (change in control) does not apply, then the
Executive shall have the same entitlements as provided under Section 8(D) for a termination by the
Company without Cause.

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          (F) Termination Without Cause Following a Change in Control or Potential Change in
Control. In the event that: (i) the Executive’s employment hereunder is terminated (A)
through a Constructive Termination without Cause or (B) by the Company without Cause and (ii) the
termination of employment occurs within two years following a Change in Control, and provided
Executive executes a full release satisfactory to the Company, then the Executive shall be entitled
to:

               (1) Base Salary through the second anniversary of the Termination Date, payable as provided in
Section 4;

               (2) a Pro-Rata annual incentive bonus award for the fiscal year in which the Termination Date
occurs based on the Executive’s annual incentive bonus award opportunity for such fiscal year (excluding any overachievement bonus award opportunity), payable
in a lump sum promptly following the Termination Date, regardless of the Executive’s and Company’s
performance during such fiscal year;

               (3) an amount equal to twice the Executive’s annual bonus opportunity for the year of
termination (excluding any overachievement bonus award opportunity) payable in equal installments
over the 24-month period for which Base Salary is continued;

               (4) the continued right to exercise any outstanding stock option for a period of 3 months from
the Termination Date (provided, however, that no options may be exercised after their expiration
date), all such options to become fully vested and exercisable as of the Termination Date;

               (5) the immediate vesting of all shares of restricted stock of the Company as of the
Termination Date;

               (6) an amount equal to the Company’s contributions to which the Executive would have been
entitled under the Company’s Retirement Savings Plan (or any successor thereto) if the Executive
had continued working for the Company and the Retirement Savings Plan continued in force during the
twenty-four months following the Termination Date (“Separation Period”) at the highest annual rate
of Base Salary achieved during the Executive’s period of actual employment with the Company, and
making the maximum amount of employee contributions, if any, as are required under such plan;

               (7) an amount equal to the excess of (i) the present value of the benefits to which the
Executive would be entitled under the Company’s pension plan and Company’s supplemental retirement
plan (and any successor thereto) if the Executive had continued working for the Company for a
period of 24 months following the Termination Date at the highest annual rate of Base Salary
achieved during the Executive’s period of actual employment with the Company, and the pension plan
continued in force during the Separation Period, over (ii) the present value of the benefits to
which the Executive is actually entitled under the Company’s pension plan and supplemental
retirement plan, each computed as of the date of the Executive’s Date of Termination, with present
values to be

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determined using the discount rate used by the Pension Benefits Guaranty Corporation to
calculate the benefit liabilities under the pension plan in the event of a plan termination on the
Date of Termination, compounded monthly, the mortality tables prescribed in the Company’s Pension
Plan for determining actuarial equivalence, and the reduction factor (if any) for the early
commencement of pension payments based on the Executive’s age on the last day of the 24th month
following the Termination Date;

               (8) immediate vesting in the Company’s Retirement Savings Plan (or any successor 401(k) plan),
pension plan, supplemental retirement plan and deferred compensation plans;

               (9) continued participation, through the second anniversary of the Termination Date, in all
medical, dental, vision, hospitalization, disability and life insurance coverages and in all other
employee welfare benefit plans, programs and arrangements in which he/she or his/her family members
were participating on such date, on terms and conditions that are no less favorable to him/her than
those that applied on such date and with COBRA benefits commencing thereafter, provided that the
Company’s obligation under this Section 8(F)(9) shall be reduced to the extent that equivalent
coverages and benefits (determined on a coverage-by-coverage and benefit-by-benefit basis) are
provided under the plans, programs or arrangements of a subsequent employer; and provided
further that to the extent coverage detailed in this subsection is longer than the period
Executive would be entitled to COBRA coverage, commencing with the first month immediately
following the expiration of the period the COBRA coverage would be available, the Company shall
provide to Executive such coverage or reimburse to Executive the costs incurred by him in obtaining
the above-described benefits in accordance with the requirements of Treas. Reg. §1.409A-3(i)(1)(iv)
for the remaining period in which such continued coverage is required to be provided pursuant to
this clause so long as the coverage for which Executive shall continue to be eligible for under
this subsection shall be made available to Executive on the same terms and conditions as are
offered to continuing executives; and

               (10) the benefits described in Section 8(H)(1).

               For purposes of this Section 8(F), if preceded by a Potential Change in Control, any of the
following events (if such event occurs within two years following such Potential Change in Control)
shall be deemed to be a Termination of Executive’s Employment without Cause following a Change in
Control: (i) the Executive’s employment is terminated without Cause and such termination is at the
request or direction of or pursuant to negotiations with a Person who has entered into an agreement
with the Company the consummation of which will constitute a Change in Control; (ii) the
Executive’s employment is terminated through a Constructive Termination Without Cause and the
circumstances or events which constitute the basis for Executive’s claim of Constructive
Termination occur at the request or direction of, or pursuant to negotiations with, such Person, or
(iii) the Executive’s employment is terminated without Cause and such termination is otherwise in
connection with or in anticipation of a Change in Control which actually occurs.

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          The Company agrees that the Executive is not required to seek other employment or to attempt
in any way to reduce amounts payable to Executive under this Section 8(F), and the amounts payable
to pursuant to this Section 8(F) shall not be reduced by any amounts earned by or payable to
Executive, except as provided in Section 8(F)(9).

          (G) Voluntary Termination. In the event that the Executive terminates his/her
employment with the Company on his/her own initiative (other than by death, for Disability, by a
Constructive Termination without Cause), then he/she shall have the same entitlements as provided
in Section 8(C)(2) in the case of a termination by the Company for Cause. A voluntary termination
under this Section 8(G) shall be effective upon written notice to the Company and shall not be
deemed a breach of this Agreement.

          (H) Miscellaneous.

               (1) On any termination of the Executive’s employment hereunder, he/she shall be entitled to:

                    (A) Base Salary through the Termination Date;

                    (B) any amounts due him/her under Section 7;

                    (C) a lump-sum payment in respect of accrued but unused vacation days at his/her Base Salary
rate in effect as of the Termination Date;

                    (D) payment, promptly when due, of all amounts owed to him/her in connection with the
termination; and

                    (E) other benefits, if any, in accordance with applicable plans, programs and arrangements of
the Company. This provision will permit the Executive to elect to take advantage of any provisions
of, or changes to, the IKON benefit plans which are applicable to IKON employees generally
(including, without limitation, provisions relating to the vesting/exercisability of stock options
in the event of retirement or disability), provided that Executive opts to have
such general provisions applied on his/her behalf instead of those set forth in this Agreement. In
no event, however, will this provision entitle Executive to duplicative or double benefits, nor
shall he/she be eligible to receive payments under any severance program of the Company applicable
to employees generally.

               (2) Any amounts due under this Section 8 are considered to be reasonable by the Company and
are not in the nature of a penalty.

               (3) Internal Revenue Code Section 409A. Notwithstanding anything in this agreement to
the contrary, if Executive is a “specified employee” under section 409A of the Code of a publicly
traded corporation on the date of Executive’s termination of employment, the accumulated payments
under subsections 8(B) or 8(D)-(F) of this Section 8 that would have been paid within the six month
period following Executive’s termination of employment will be delayed on account of section 409A
of the Code so that

13

 

such amounts shall be paid in a lump sum payment, without interest, within ten (10) business
days following the six month anniversary of Executive’s termination of employment. If Executive
dies during the postponement period and prior to payment of the postponed amount, the amounts
withheld on account of section 409A of the Code shall be paid to the personal representative of
Executive’s estate within 60 days after the date of Executive’s death. The determination of
“specified employees” shall be made by the Human Resources Committee (or its delegate) in
accordance with section 409A of the Code and the regulations issued thereunder.

     9. Golden Parachute Tax. In the event that any payment or benefit made or provided to
or for the benefit of the Executive in connection with this Agreement, the Executive’s employment
with the Company, or the termination thereof (a “Payment”) is determined to be subject to any
excise tax (“Excise Tax”) imposed by Section 4999 of the Code (or any successor to such Section),
the Company shall pay to the Executive, prior to the time any Excise Tax is payable with respect to
such Payment (through withholding or otherwise), an additional amount which, after the imposition
of all income, employment, excise and other taxes, penalties and interest thereon, is equal to the
sum of (i) the Excise Tax on such Payment plus (ii) any penalty and interest assessments associated
with such Excise Tax. The determination of whether any Payment is subject to an Excise Tax and, if
so, the amount to be paid by the Company to the Executive and the time of payment shall be made by
an independent auditor (the “Auditor”) selected jointly by the Parties and paid by the Company.
Unless the Executive agrees otherwise in writing, the Auditor shall be a nationally recognized
United States public accounting firm that has not, during the two years preceding the date of its
selection, acted in any way on behalf of the Company or any of its Affiliates. If the Parties
cannot agree on the firm to serve as the Auditor, then the Parties shall each select one accounting
firm and those two firms shall jointly select the accounting firm to serve as the Auditor.

     10. Indemnification; D&O Insurance.

          (A) Indemnification. The Company agrees that: (i) if the Executive is made a party,
or is threatened to be made a party, to any Proceeding by reason of the fact that he/she is or was
a director, officer, employee, agent, manager, consultant or representative of the Company or is or
was serving at the request of the Company or any of its Affiliates as a director, officer, member,
employee, agent, manager, consultant or representative of another Person or (ii) if any Claim is
made, or threatened to be made, that arises out of or relates to this Agreement or the Executive’s
service hereunder or in any of the foregoing capacities, then the Executive shall promptly be
indemnified and held harmless by the Company for any Claims brought by a third party against the
Executive to the fullest extent legally permitted or authorized by the Company’s Articles of
Incorporation, Code of Regulations or Board resolutions or by the laws of the State of Ohio,
against any and all costs, expenses, liabilities and losses (including, without limitation,
attorney’s fees, judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by the
Executive in connection therewith, and such indemnification shall continue as to the Executive even
if he/she has ceased to be a director, member, employee, agent, manager, consultant or
representative of the Company or other

14

 

Person and shall inure to the benefit of the Executive’s heirs, executors and administrators.
The Company shall advance to the Executive all costs and expenses incurred by him/her in connection
with any such Proceeding or Claim within 20 days after receiving written notice requesting such an
advance. Such notice shall include, to the extent required by applicable law, an undertaking by
the Executive to repay the amount advanced if he/she is ultimately determined not to be entitled to
indemnification against such costs and expenses.

          (B) D&O Insurance. During the Term of Agreement and for a period of six years
thereafter, the Company shall keep in place a directors’ and officers’ liability insurance policy
(or policies) providing comprehensive coverage to the Executive to the extent that the Company
provides such coverage for any other senior executive or director.

     11. Covenants.

          (A) Confidentiality. During the Term of Agreement and thereafter, the Executive shall
not, without the prior written consent of the Company, divulge, disclose or make accessible to any
Person any confidential non-public document, record or information concerning the business or
affairs of the Company that he/she has acquired in the course of his/her employment hereunder,
except (i) to the Company or to any authorized (or apparently authorized) agent or representative
of the Company, (ii) to authorized third parties in connection with performing his/her duties under
this Agreement, or (iii) when required to do so by law or by a court, governmental agency,
legislative body, or other Person with apparent jurisdiction to order him/her to divulge, disclose
or make accessible such information; provided that these restrictions shall not
apply to any document, record or other information that: (i) has previously been disclosed to the
public, or is in the public domain, other than as a result of the Executive’s breach of this
Section 11(A), or (ii) is known or generally available within any trade or industry of the Company.

          (B) Non-Solicitation. During the twenty-four (24) month period that commences on the
Termination Date and ends on the second anniversary of the Termination Date, the Executive shall
not without the prior consent of the Company:

               (a) solicit, on his/her own behalf or on behalf of any other Person, any individual known by
the Executive to be an employee of the Company to instead become an employee of any Person not
affiliated with the Company; or

               (b) solicit, on his/her own behalf or on behalf of any other Person, any Person known by the
Executive to be customer of, or vendor to, the Company to cease to be a customer or vendor of the
Company and/or to become a customer of, or vendor to, any Person not affiliated with the Company.

          (C) Non-Competition.  During the twenty-four (24) period that commences on the
Termination Date and ends on the second anniversary of the Termination Date, the Executive shall
not, without the prior consent of the Company, directly or indirectly own, manage, operate, join,
control or participate in the ownership, management, operation or control of, or be employed by or
otherwise connected in any substantial manner with any

15

 

business which directly or indirectly competes to a material extent with any line of business
of the Company or its subsidiaries which was operated by the Company or its subsidiaries at the
Termination Date; provided that nothing in this paragraph shall prohibit the Executive from
acquiring up to 5% of any class of outstanding equity securities of any corporation whose equity
securities are regularly traded on a national securities exchange or in the “over-the-counter
market.”

          The foregoing noncompetition restriction of this Section 11(C) shall not apply following a
Change of Control Event if (a) the Executive’s employment has been terminated by the Company
without Cause within two years following such Change in Control Event, (b) the Executive terminates
his/her employment as the result of a Constructive Termination within two years following such
Change in Control Event or (c) the Company elects, within two years following such Change in
Control Event, not to extend the term of employment.

          The foregoing noncompetition restriction of this Section 11(C) shall not apply following a
Potential Change in Control if: (i) the Executive’s employment is terminated without Cause within
two years following such Potential Change in Control, and such termination is at the request or
direction of or pursuant to negotiations with a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control; (ii) the Executive’s
employment is terminated through a Constructive Discharge without Cause within two years following
such Potential Change in Control, and the circumstances or events which constitute the basis for
Executive’s claim of Constructive Discharge occur at the request or direction of, or pursuant to
negotiations with, such Person, iii) the Company elects, within two years following such Potential
Change in Control, not to extend the term of employment, and such election was at the request or
direction of or pursuant to negotiations with such Person; or iv) the Executive’s employment is
terminated without Cause within two years following such Potential Change in Control and such
termination is otherwise in connection with or in anticipation of a Change in Control which
actually occurs.

     12. Assignability; Binding Nature.

          This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations
of the Company under this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or a sale or liquidation of all or substantially all of
the assets of the Company; provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in this Agreement,
either contractually or as a matter of law. In the event of any sale of assets or liquidation as
described in the preceding sentence, the Company shall use its best efforts to cause such assignee
or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder.
No rights or obligations of the Executive under this Agreement may be assigned or transferred by
the Executive other than his/her

16

 

rights to compensation and benefits, which may be transferred only by will or operation of law, except as provided in Section 16(E).

     13. Representations.

          (A) The Company’s Representations. The Company represents and warrants that (i) it is
fully authorized by action of its Board (and of any other Person or body whose action is required)
to enter into this Agreement and to perform its obligations under it; (ii) the execution, delivery
and performance of this Agreement by the Company does not violate any applicable law, regulation,
order, judgment or decree or any agreement, plan or corporate governance document of the Company;
and (iii) upon the execution and delivery of this Agreement by the Parties, this Agreement shall be
the valid and binding obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights generally.

          (B) The Executive’s Representations. The Executive represents and warrants that, to
the best of his/her knowledge and belief, (i) delivery and performance of this Agreement by him/her
does not violate any applicable law, regulation, order, judgment or decree or any agreement to
which the Executive is a party or by which he/she is bound, and (ii) upon the execution and
delivery of this Agreement by the Parties, this Agreement shall be the valid and binding obligation
of the Executive, enforceable against him/her in accordance with its terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.

     14. Resolution of Disputes.

          Any Claim arising out of or relating to this Agreement or the Executive’s employment with the
Company or the termination thereof shall be resolved by binding confidential arbitration, to be
held in Philadelphia, Pennsylvania, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.

     15. Notices.

          Any notice, consent, demand, request, or other communication given to a Person in connection
with this Agreement shall be in writing and shall be deemed to have been given to such Person (i)
when delivered personally to such Person or (ii), provided that a written acknowledgment of receipt
is obtained, two days after being sent by prepaid certified or registered mail, or by a nationally
recognized overnight courier, to the address specified below for such Person (or to such other
address as such Person shall have specified by ten days advance notice given in accordance with
this Section 15), or (iii) in the case of the Company only, on the first business day after it is
sent by facsimile to the facsimile number set forth for the Company (or to such other facsimile
number as the Company shall have specified by ten days advance notice given in accordance with this
Section 15), with a

17

 

confirmatory copy sent by certified or registered mail or by overnight courier to the Company
in accordance with this Section 15.

	 	 	 
	If to the Company:

	 	IKON Office Solutions, Inc.
	 

	 	70 Valley Stream Parkway
	 

	 	Malvern, Pennsylvania 19355
	 

	 	Attn: Chief Executive Officer
	 

	 	Facsimile #: 610-725-8279
	 
	 	 
	If to the Executive:

	 	Jeffrey Hickling, at the last address known to the Company with a copy to the Executive at the Company’s address)
	 
	 	 
	If to a beneficiary

of the Executive:

	 	The address most recently specified by the Executive or beneficiary through notice given in accordance with this Section 15.

     16. Miscellaneous.

          (A) Entire Agreement. This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.

          (B) Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law so as to achieve the purposes of this Agreement.

          (C) Amendment or Waiver. No provision in this Agreement may be amended unless such
amendment is set forth in a writing signed by the Parties. No waiver by either Party of any breach
of any condition or provision contained in this Agreement shall be deemed a waiver of any similar
or dissimilar condition or provision at the same or any prior or subsequent time. To be effective,
any waiver must be set forth in a writing signed by the waiving Party.

          (D) Headings. The headings of the Sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

          (E) Beneficiaries/References. The Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit hereunder following the Executive’s death by giving the Company written
notice thereof. In the event of the Executive’s death or a judicial determination of his/her
incompetence, references in this Agreement to the Executive shall

18

 

be deemed, where appropriate, to refer to his/her beneficiary, estate or other legal
representative.

          (F) Survivorship. Except as otherwise set forth in this Agreement, the respective
rights and obligations of the Parties hereunder shall survive any termination of the Executive’s
employment.

          (G) Governing Law/Jurisdiction. This Agreement shall be governed, construed,
performed and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to principles of conflict of laws.

          (H) Counterparts. This Agreement may be executed in two or more counterparts.

          (I) Employee Benefit Plans.  In the event that the terms of any of the Company’s
employee benefit plans provide for the vesting or distribution of benefits on a date earlier than
the date set forth in this Agreement, such earlier date shall prevail.

          IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the
date set forth above:

	 	 	 	 	 
	 	The Company
 	 
	 
	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 
	 	The Executive 	 
	 
	 
	 	 	 

19EXHIBIT 10.92

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March
31, 2008, 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 "Securities 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 (i) up to One Million Two
Hundred Fifty Thousand Dollars ($1,250,000) of secured convertible debentures in
the form attached hereto as "Exhibit A" (the "Convertible Debentures"), which
shall be convertible into shares of the Company's common stock, par value $0.001
(the "Common Stock") (as converted, the "Conversion Shares"), and (ii) warrants
substantially in the form attached hereto as "Exhibit B" (the "Warrants"), to
acquire up to that number of additional shares of Common Stock set forth
opposite such Buyer's name in column (5) of Schedule I attached hereto (as
exercised, the "Warrant Shares"), which shall be funded within two business day
of the date hereof (the "Funding Date") for a total purchase price of up to One
Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the "Purchase Price")
in the respective amounts set forth opposite each Buyer(s) name on Schedule I
(the "Subscription Amount");

      WHEREAS, on the date hereof, the Company and the Buyer are executing and
delivering an Amendment No. 4 to the Amended and Restated Security Agreement
(the "Security Agreement") pursuant to which the Company agreed to extend the
Buyer's security interest which was originally created in connection with a loan
made to the Company by the Buyer in the Pledged Property (as this term is
defined in the Security Agreement) to secure all the Company's obligations to
the Buyer, which shall include all obligations to the Buyer created in this
Agreement and the Convertible Debentures issued in connection 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"); and

      WHEREAS, the Convertible Debentures, the Conversion Shares, the Warrants,
and the Warrants Shares collectively are referred to herein as the "Securities".
<PAGE>

      WHEREAS, pursuant to that certain securities purchase agreement (the
"Bridge SPA") dated March 30, 2007 between the Buyer and the Company, the
Company has issued to the Buyer secured convertible debentures in the principal
amount of One Million One Hundred Thousand Dollars ($1,100,000.00), of which a
total of $844,836 in principal remains outstanding as of the date of this
Agreement (the Bridge SPA, the secured convertible debentures issued thereunder,
and all related documents are hereinafter referred to as the "YA Bridge
Debentures" and all monetary obligations of the Company to Buyer under the YA
Bridge Debentures, including without limitation all principal, interest,
redemption fees, costs, and expenses, whether now owed or hereafter arising are
hereinafter referred to as the "YA Bridge Debenture Obligations"); and

      WHEREAS, in addition to the YA Bridge Debenture Obligations, the Company
is indebted to the Buyer under prior financing arrangements (the "Prior
Financing Agreements") between the Buyer and the Company in the aggregate
principal amount of $9,258,000 (all secured convertible debentures issued
pursuant to the Prior Financing Agreements and all related documents are
hereinafter referred to as the "Prior Debentures" and all monetary obligations
of the Company to Buyer under the Prior Debentures, including without limitation
all principal, interest, redemption fees, costs, and expenses, whether now owed
or hereafter arising are hereinafter referred to as the "Prior Debenture
Obligations");

      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 and the Company agrees to sell and issue
to each Buyer, severally and not jointly, Convertible Debentures in amounts
corresponding with the Subscription Amount set forth opposite each Buyer's name
on Schedule I hereto and the Warrants to acquire up that number of Warrant
Shares as set forth opposite such Buyer's name in column (5) on Schedule I.

            (b) Closing Dates. The Closing of the purchase and sale of the
Convertible Debentures and Warrants shall take place at 10:00 a.m. Eastern
Standard Time within two business days of the date hereof (the "Closing Date"),
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)) on or before the Funding Date. The
Closing shall occur on the Closing Date 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) Form of Payment. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date, (i) the Buyers shall deliver
to the Company such aggregate proceeds for the Convertible Debentures and
Warrants to be issued and sold to such Buyer at such Closing, minus the fees to
be paid directly from the proceeds of such Closing as set forth herein, and (ii)
the Company shall deliver to each Buyer, Convertible Debentures and Warrants
which such Buyer is purchasing at such Closing in amounts indicated opposite
such Buyer's name on Schedule I, duly executed on behalf of the Company.

                                       2
<PAGE>

      2. BUYER'S REPRESENTATIONS AND WARRANTIES.

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

            (a) Investment Purpose. Each Buyer is acquiring the Securities 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 Securities Act; provided, however, that
by making the representations herein, such Buyer reserves the right to dispose
of the Securities at any time in accordance with or pursuant to an effective
registration statement covering such Securities or an available exemption under
the Securities Act. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

            (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
Securities 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 the 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
Securities, 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 Securities involves a high degree
of risk. 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 Securities.

            (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 Securities, or
the fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities. 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 issuance and sale of its
securities except as may be provided herein.

                                       3
<PAGE>

            (f) Transfer or Resale. Each Buyer understands that: (i) the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (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, or (C) such Buyer provides the Company with reasonable assurances
(in the form of seller and broker representation letters) that such Securities
can be sold, assigned or transferred pursuant to Rule 144, or Rule 144A
promulgated under the Securities Act, as amended (or a successor rule thereto)
(collectively, "Rule 144"), in each case following the applicable holding period
set forth therein; (ii) any sale of the Securities made in reliance on 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 the 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 Securities Act) may require
compliance with some other exemption under the Securities 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 the Securities under the Securities
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.

            (g) Legends. Each Buyer agrees to the imprinting, so long as is
required by this Section 2(g), of 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.

Certificates evidencing the Conversion Shares or Warrant Shares shall not
contain any legend (including the legend set forth above), (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Conversion Shares or Warrant
Shares pursuant to Rule 144, (iii) if such Conversion Shares or Warrant Shares
are eligible for sale under Rule 144, or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC). The Company
shall cause its counsel to issue a legal opinion to the Company's transfer agent
promptly after the effective date (the "Effective Date") of a Registration
Statement if required by the Company's transfer agent to effect the removal of
the legend hereunder. If all or any portion of the Convertible Debentures or
Warrants are exercised by a Buyer that is not an Affiliate (as defined below) of
the Company (a "Non-Affiliated Buyer") at a time when there is an effective
registration statement to cover the resale of the Conversion Shares or the
Warrant Shares, such Conversion Shares or Warrant Shares shall be issued free of
all legends. The Company agrees that following the Effective Date or at such

                                       4
<PAGE>

time as such legend is no longer required under this Section 2(g), it will, no
later than three (3) Trading Days following the delivery by a Non-Affiliated
Buyer to the Company or the Company's transfer agent of a certificate
representing Conversion Shares or Warrant Shares, as the case may be, issued
with a restrictive legend (such third Trading Day, the "Legend Removal Date"),
deliver or cause to be delivered to such Non-Affiliated Buyer a certificate
representing such shares that is free from all restrictive and other legends.
The Company may not make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section. Each Buyer acknowledges that the Company's agreement
hereunder to remove all legends from Conversion Shares or Warrant Shares is not
an affirmative statement or representation that such Conversion Shares or
Warrant Shares are freely tradable. Each Buyer, severally and not jointly with
the other Buyers, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 3(g) is
predicated upon the Company's reliance that the Buyer will sell any Securities
pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a Registration Statement,
they will be sold in compliance with the plan of distribution set forth therein.

            (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 are valid and
binding agreements of such Buyer enforceable in accordance with their 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.

            (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 and the Transaction Documents (as defined
herein); (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company's Form 10-KSB for the fiscal year ended December 31, 2006;
(iv) the Company's quarterly reports on Form 10-QSB for the periods ended March
31, 2007, June 30, 2007 and September 30, 2007; (v) the Company's Reports on
Form 8-K filed on December 10, 2007, December 18, 2007, January 9, 2008,
February 15, 2008, February 28, 2008 and March 19, 2008; and (vi) 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.

                                       5
<PAGE>

            (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 has not been organized for the
specific purpose of purchasing the Securities 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.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      Except as set forth in the SEC Documents (as defined herein) or under the
corresponding section of the Disclosure Schedules which Disclosure Schedules
shall be deemed a part hereof and to qualify any representation or warranty
otherwise made herein to the extent of such disclosure, the Company hereby makes
the representations and warranties set forth below to each Buyer:

            (a) Organization and Qualification. The Company and its subsidiaries
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. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise) of the
Company, taken as a whole, or (iii) a material adverse effect on the Company's
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse
Effect") and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

            (b) Authorization, Enforcement, Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement, the Convertible Debentures,
the Warrants, the Security Agreement, the Irrevocable Transfer Agent
Instructions, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively the "Transaction Documents") and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Securities, the reservation for issuance and the issuance of the
Conversion Shares, and the reservation for issuance and the issuance of the
Warrant Shares, 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) the Transaction Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents 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 the Transaction Documents knows of
no reason why the Company cannot perform any of the Company's other obligations
under the Transaction Documents.

                                       6
<PAGE>

            (c) Capitalization. The authorized capital stock of the Company
consists of 95,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, par value $0.001 ("Preferred Stock") of which 45,804,168 shares of Common
Stock and no shares of Preferred Stock are issued and outstanding. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as disclosed in the SEC Documents or Schedule 3(d)
and immediately preceding the Closing: (i) none of the Company's capital stock
is subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii) 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, or
exercisable or exchangeable for, any 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 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, or exercisable
or exchangeable for, any capital stock of the Company or any of its
subsidiaries; (iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing indebtedness of the Company or any of its subsidiaries or by which
the Company or any of its subsidiaries is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company or any of its
subsidiaries; (v) there are no outstanding securities or instruments of the
Company or any of its subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is or may become
bound to redeem a security of the Company or any of its subsidiaries; (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (vii) the Company does
not have any stock appreciation rights or "phantom stock" plans or agreements or
any similar plan or agreement; and (viii) the Company and its subsidiaries have
no liabilities or obligations required to be disclosed in the SEC Documents but
not so disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company's or its subsidiaries' respective businesses and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect. The Company has furnished to the Buyers or made available through the
SEC Documents true, correct and complete 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 Bylaws, as amended and as in effect on the
date hereof (the "Bylaws"), and the terms of all securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and the material rights
of the holders thereof in respect thereto. No further approval or authorization
of any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company's stockholders.

                                       7
<PAGE>

            (d) Issuance of Securities. The issuance of the Convertible
Debentures and the Warrants is duly authorized and free from all taxes, liens
and charges with respect to the issue thereof. Upon conversion in accordance
with the terms of the Convertible Debentures or exercise in accordance with the
Warrants, as the case may be, the Conversion Shares and Warrant Shares,
respectively, when issued will be validly issued, fully paid and nonassessable,
free from all taxes, liens and charges with respect to the issue thereof. The
Company has reserved from its duly authorized capital stock the appropriate
number of shares of Common Stock as set forth in this Agreement.

            (e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Convertible Debentures and the Warrants, and reservation for
issuance and issuance of the Conversion Shares and the Warrant Shares) will not
(i) result in a violation of any certificate of incorporation, certificate of
formation, any certificate of designations or other constituent documents of the
Company, any capital stock of the Company or bylaws of the Company or (ii)
conflict with, or constitute a material default (or an event which with notice
or lapse of time or both would become a material default) in any respect under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and
regulations and the rules and regulations of the National Association of
Securities Dealers Inc.'s OTC Bulletin Board) applicable to the Company or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect. The business of the Company is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the Securities 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. 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 is unaware of any facts or circumstance, which
might give rise to any of the foregoing.

            (f) SEC Documents; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(all of the foregoing filed prior to the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and schedules
thereto and any prospectuses that are current as of the date hereof and
documents incorporated by reference therein, being hereinafter referred to as
the "SEC Documents") on timely basis or has received a valid extension of such
time of filing and has filed any such SEC Document prior to the expiration of
any such extension. The Company has delivered to the Buyers or their
representatives, or made available through the SEC's website at
http://www.sec.gov., true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue

                                       8
<PAGE>

statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(i) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made and not misleading.

            (g) 10(b)-5. The SEC Documents do not include any untrue statements
of material fact, nor do they omit to state any material fact required to be
stated therein necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.

            (h) Absence of Litigation. 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 or the Common Stock, wherein an unfavorable decision, ruling or finding
would have a Material Adverse Effect.

            (i) Acknowledgment Regarding Buyer's Purchase of the Convertible
Debentures. The Company acknowledges and agrees that each Buyer 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 each
Buyer 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 each Buyer 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 Securities. The Company further represents to each 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.

                                       9
<PAGE>

            (j) 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 Securities Act) in connection with the offer or sale of
the Securities.

            (k) 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
Securities under the Securities Act or cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the Securities
Act.

            (l) Employee Relations. The Company is not involved in any labor
dispute or, to the knowledge of the Company, is any such dispute threatened.
None of the Company's employees is a member of a union and the Company believes
that its relations with its employees are good.

            (m) Intellectual Property Rights. The Company owns or possesses
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 its business as now conducted. The Company does not
have any knowledge of any infringement by the Company 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 is unaware of any facts or circumstances which might give rise
to any of the foregoing. (n) Environmental Laws. The Company is (i) in
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 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.

            (o) Title. All real property and facilities held under lease by the
Company is 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.

                                       10
<PAGE>

            (p) 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 not been refused any
insurance coverage sought or applied for and the Company has no 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.

            (q) Regulatory Permits. The Company possesses or is in the process
of applying for all material certificates, authorizations and permits 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 or modification of any such certificate,
authorization or permit.

            (r) 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 are compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

            (s) No Material Adverse Breaches, etc. The Company is not 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. The Company is not 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.

            (t) Tax Status. The Company 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 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.

                                       11
<PAGE>

            (u) Certain Transactions. 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 SEC Documents, 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.

            (v) 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.

            (w) Investment Company. The Company is not, and is not an affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.

            (x) Registration Rights. Other than each of the Buyers, no person
has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company. There are no outstanding
registration statements not yet declared effective and there are no outstanding
comment letters from the SEC or any other regulatory agency.

            (y) Private Placement. Assuming the accuracy of the Buyers'
representations and warranties set forth in Section 2, no registration under the
Securities Act is required for the offer and sale of the Securities by the
Company to the Buyers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the OTCBB.

            (z) Listing and Maintenance Requirements. The Company's Common Stock
is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to terminate, or which to its knowledge is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the
SEC is contemplating terminating such registration. The Company has not, in the
twelve (12) months preceding the date hereof, received notice from any Primary
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Primary Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in material
compliance with all such listing and maintenance requirements.

                                       12
<PAGE>

            (aa) Reporting Status. With a view to making available to the Buyer
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Buyer to sell securities of the Company to the public
without registration, and as a material inducement to the Buyer's purchase of
the Securities, the Company represents and warrants to the following: (i) the
Company is, and has been for a period of at least 90 days immediately preceding
the date hereof, subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act and has filed all required reports under section 13 or 15(d) of
the Exchange, as applicable, during the 12 months preceding the date hereof (or
for such shorter period that the Company was required to file such reports), and
(ii) the Company is not and for at least the last 12 months prior to the date
hereof has not been a "shell company," as defined in paragraph (i)(1)(i) of Rule
144.

            (bb) Manipulation of Price. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company's placement agent in connection with the
placement of the Securities.

            (cc) Dilutive Effect. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Convertible
Debentures and the Warrant Shares issuable upon exercise of the Warrants will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Convertible
Debentures in accordance with this Agreement and the Convertible Debentures and
its obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants, in each case, is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.

(dd) Except as disclosed on the Disclosure Schedule no securities of the Company
will be ratcheted, reset, adjusted, or repriced as a result of the issuance of
the Securities.

      4. COVENANTS.

            (a) Best Efforts. Each party shall use its best efforts to timely
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
Securities 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 Securities, or obtain an exemption for the Securities 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, and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date.

                                       13
<PAGE>

            (c) Reporting Status. With a view to making available to the Buyer
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Buyer to sell securities of the Company to the public
without registration, and as a material inducement to the Buyer's purchase of
the Securities, the Company represents, warrants, and covenants to the
following:

                  (i) from the date hereof until all the Securities either have
been sold by the Buyer, or may permanently be sold by the Buyer without any
restrictions pursuant to Rule 144, (the "Registration Period") the Company shall
file with the SEC in a timely manner all required reports under section 13 or
15(d) of the Exchange Act and such reports shall conform to the requirement of
the Exchange Act and the SEC for filing thereunder;

                  (ii) The Company shall furnish to the Buyer so long as the
Buyer owns Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Buyers to sell such securities
pursuant to Rule 144 without registration; and

                  (iii) During the Registration Period the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.

            (d) Use of Proceeds. The Company will use the proceeds from the
transaction contemplated herein in accordance with the budget forth as Exhibit C
hereto (the "Budget"), which shall include repayment of that certain convertible
debenture issued to the Buyer by the Company on March 14, 2008 in the principal
amount of $608,000, plus accrued interest. Management may not deviate from any
line item of the Budget.

            (e) Reservation of Shares.

                  (i) As of the Closing, the Company shall have reserved for
issuance to Buyer 5,000,000 shares for issuance upon conversion of the
Convertible Debentures and exercise of the Warrants (collectively, the "Share
Reserve"). The Company represents that it has sufficient authorized and
un-issued shares of Common Stock available to create the Share Reserve after
considering all other commitments that may require the issuance of Common Stock.

                  (ii) The Company shall, within 90 days of the date hereof,
call and hold a special meeting of the shareholders for of increasing the
authorized Common Stock of the Company to at least 500,000,000 shares of Common
Stock. Upon completion of such increase, the Company shall increase the Share
Reserve to at least 30,000,000 shares. 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.

                  (iii) If at any time after the shareholder vote described in
the preceding paragraph, the Share Reserve is insufficient to effect the full
conversion of the Convertible Debentures or the full exercise of the Warrants,
the Company shall increase the Share Reserve accordingly. If the Company does
not have sufficient authorized and unissued shares of Common Stock available to
increase the Share Reserve at such time, the Company shall call and hold a
special meeting of the shareholders within thirty (30) 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.

                                       14
<PAGE>

            (f) Listings or Quotation. The Company's Common Stock shall be
listed or quoted for trading on any of (a) the American Stock Exchange, (b) New
York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital
Market, or (e) the Nasdaq OTC Bulletin Board ("OTCBB") (each, a "Primary
Market"). The Company shall promptly secure the listing of all of the
Registrable Securities (as defined in the Registration Rights Agreement) upon
each national securities exchange and automated quotation system, if any, upon
which the Common Stock is then listed (subject to official notice of issuance)
and shall maintain such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents.

            (g) Fees and Expenses.

                  (i) The Company shall pay a fee of $78,750 (the "Monitoring
Fee") into an escrow account for payment to Yorkville Advisors LLC ("Yorkville")
for monitoring and managing the investment by YA Global Investments, L.P. ("YA
Global") described herein, pursuant to Yorkville's existing advisory obligations
to YA Global.

                  (ii) The Company shall pay a structuring fee to Yorkville
Advisors LLC of Twenty Five Thousand Dollars ($25,000), which shall be paid
directly from the proceeds of the Closing.

            (h) Corporate Existence. So long as at least $100,000 in principal
of the Convertible Debentures remains outstanding, the Company shall 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 in
principal of the Convertible Debentures is 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,

                                       15
<PAGE>

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 immediately 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 in principal of the Convertible Debentures is outstanding, the
Company shall not, without the prior written consent of the Buyer(s), (i) issue
or sell shares of Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common Stock determined
immediately prior to its issuance, (ii) issue any preferred stock, warrant,
option, right, contract, call, or other security or instrument granting the
holder thereof the right to acquire Common Stock without consideration or for a
consideration less than such Common Stock's Bid Price determined immediately
prior to its issuance, (iii) file any registration statement on Form S-8, except
to register securities to be issued under the Company's Stock Incentive Plan in
effect, or (iv) issue any Common Stock rights, warrants, options, or other
securities to Management (as defined herein).

            (l) Neither the Buyer(s) nor any of its affiliates have an open
short position in the Common Stock of the Company, and the Buyer(s) agrees that
it shall not, and that it will cause its affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock as long as any
Convertible Debentures shall remain outstanding.

            (m) Registration Statements. The Company will not file a
registration statement under the Securities Act relating to securities that does
not include the Securities.

            (n) Review of Public Disclosures. All SEC filings (including,
without limitation, all filings required under the Exchange Act, which include
Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other public disclosures
made by the Company, including, without limitation, all press releases, investor
relations materials, and scripts of analysts meetings and calls, shall be
reviewed and approved for release by the Company's attorneys and, if containing
financial information, the Company's independent certified public accountants.

                                       16
<PAGE>

            (o) Disclosure of Transaction. Within four business days following
the date of this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the Exchange Act and attaching the material
Transaction Documents (including, without limitation, this Agreement, the form
of the Convertible Debenture, the form of Warrant and the form of the
Registration Rights Agreement) as exhibits to such filing.

            (p) If at any time while the Convertible Debenture or the Warrants
remain outstanding there is not an effective registration statement covering all
of the shares of Common Stock underlying the Convertible Debenture and the
Warrants, and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act), then the Company shall send to each Buyer a written notice of such
determination and, if within fifteen (15) days after the date of such notice,
any such Buyer shall so request in writing, the Company shall include in such
registration statement all or any part of such shares of Common Stock underlying
the Convertible Debentures and the Warrants such Buyer requests to be
registered; provided, however, that, the Company shall not be required to
register any shares pursuant to this Section 4(p) that are eligible for resale
without any restrictions pursuant to Rule 144 promulgated under the Securities
Act or that are the subject of a then effective registration statement.

            (q) The Company shall not utilize cash flow from operations or
proceeds received by the Company in subsequent financing rounds to repay any
outstanding indebtedness other than amounts owed to the Buyer.

            (r) The Company shall amend the Prior Debentures and the YA Bridge
Debentures to provide that all amounts owed to the Buyer will contain payoff
provisions equal to the greater of (X) the amounts owed pursuant to the terms of
such debt instruments or (Y) the amount equal to the number of shares of Common
Stock that such debt instruments would be convertible into as of the payoff date
(assuming for these purposes that the number of authorized shares of Common
Stock is sufficient for the full conversion of such debt instrument and without
taking into effect any limitations on conversions or beneficial ownership
limitations set forth in such debt instruments) multiplied by the Closing Bid
Price of the Common Stock on the payoff date.

      5. TRANSFER AGENT INSTRUCTIONS.

            (a) The Company shall issue the Irrevocable Transfer Agent
Instructions to its transfer agent, and any subsequent transfer agent,
irrevocably appointing David Gonzalez, Esq. as the Company's agent for purpose
instructing its transfer agent to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company ("DTC"), registered
in the name of each Buyer or its respective nominee(s), for the Conversion
Shares and the Warrant Shares issued upon conversion of the Convertible
Debentures or exercise of the Warrants as specified from time to time by each
Buyer to the Company upon conversion of the Convertible Debentures or exercise
of the Warrants. As long as at least $100,000 in principal of the Convertible
Debentures issued under this Agreement remains outstanding, the Company shall
not change its transfer agent without the express written consent of the Buyers,
not to be unreasonably withheld by the Buyers in their sole discretion. 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 or
Warrant Shares prior to registration of such shares under the Securities Act)
will be given by the Company to its transfer agent, and that the Securities
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the Securities

                                       17
<PAGE>

in accordance with Section 2(f), the Company shall promptly instruct its
transfer agent to issue one or more certificates or credit shares to the
applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment and, with
respect to any transfer, shall permit the transfer. In the event that such sale,
assignment or transfer involves Conversion Shares or Warrant Shares sold,
assigned or transferred pursuant to an effective registration statement or
pursuant to Rule 144, the transfer agent shall issue such Securities to the
Buyer, assignee or transferee, as the case may be, without any restrictive
legend. 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. 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 SELL.

      The obligation of the Company hereunder to issue and sell the Convertible
Debentures to the Buyer(s) 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 Company's sole benefit and may be waived by the
Company at any time in its sole discretion:

            (a) Each Buyer shall have executed the Transaction Documents and
delivered them to the Company.

            (b) The Buyer(s) shall have delivered to the Company the Purchase
Price for the Convertible Debentures and Warrants in the respective amounts as
set forth next to each Buyer as set forth on Schedule I attached hereto, minus
any fees to be paid directly from the proceeds the Closing as set forth herein,
by wire transfer of immediately available U.S. funds pursuant to the wire
instructions provided by the Company.

            (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.

                                       18
<PAGE>

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

            (a) 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:

                  (i) The Company shall have executed the Transaction Documents
and delivered the same to the Buyers.

                  (ii) The Common Stock shall be authorized for quotation or
trading on the Primary Market, trading in the Common Stock shall not have been
suspended for any reason, and all the Conversion Shares issuable upon the
conversion of the Convertible Debentures shall be approved for listing or
trading on the Primary Market.

                  (iii) 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.

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

                  (v) The Buyers shall have received an opinion of counsel from
counsel to the Company in a form satisfactory to the Buyers.

                  (vi) The Company shall have provided to the Buyers a true copy
of a certificate of good standing evidencing the formation and good standing of
the Company from the secretary of state (or comparable office) from the
jurisdiction in which the Company is incorporated, as of a date within 10 days
of the Closing Date.

                  (vii) All prior bridge loan lenders to the Company shall have
entered into subordination agreements with the Buyer in a form reasonably
satisfactory to the Buyer, pursuant to which such lenders will agree to
subordinate to the Buyer in terms payment and any liens, provided however, that
such lender's shall be permitted to be repaid from an institutional capital
raise from third parties after the Buyer has be repaid at least $6,250,000 of
its existing debt.

                                       19
<PAGE>

                  (viii) The Company shall have created the Share Reserve.

                  (ix) 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.

                  (x) Prior to the Closing Date, John G. Murphy, George J. Mehm,
Jr., Donal McSullivan, Terry Dennison and Gabriel Roberts (collectively,
"Management") shall each enter into a salary reduction agreement in a form
acceptable to the Buyer providing that 20% of such person's salary shall be
reduced until the aggregate debt owed to the Buyer is reduced by $6.25 million
or more, at which time the person's salary may be restored to its prior level.
Any accrued but unpaid salary may be converted into Common Stock at the greater
of (i) the VWAP on the day immediately preceding the payoff of the YA Bridge
Debenture or (ii) $0.50 per share (and such accrued but unpaid salary shall not
be paid in cash). Any person referenced herein that has contributed to the
Management Contribution described in the Securities Purchase Agreement dated as
of August 24, 2007 (the "August 2007 SPA") may elect not to convert the portion
of the accrued but unpaid salary equal to such person's Management Contribution
(as such term is defined in the August 2007 SPA) and may be paid in cash only
after all amounts owed collectively under the Prior Debentures and the Bridge
Loans have been reduced by $6.25 million or more.

                  (xi) The Company shall have raised an additional $1,250,000
from an existing investor of the Company on terms satisfactory to the Buyer.

      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 other Transaction

                                       20
<PAGE>

Documents 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 other Transaction Documents 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 Buyer 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 parties hereto, 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 or 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 Transaction Documents 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 Transaction Documents or any other certificate, instrument
or document contemplated hereby or 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 Transaction Documents or any other instrument, document or
agreement executed pursuant hereto by any of the parties hereto. 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. REAFFIRMATION AND RELEASE.

            (a) The Company does hereby, on behalf of itself and its agents,
representatives, attorneys, assigns, heirs, executors and administrators
(collectively, "Company Parties") RELEASE AND FOREVER DISCHARGE the Buyer and
its subsidiaries and its respective affiliates, parents, joint ventures,
officers, directors, shareholders, interest holders, members, managers,
employees, consultants, representatives, successors and assigns, heirs,
executors and administrators (collectively, "Buyer Parties") from all causes of
action, suits, debts, claims and demands whatsoever known or unknown, at law, in
equity or otherwise, which the Company Parties ever had, now has, or hereafter
may have, arising from or relating in any way to the Company's status as a
debtor of the Buyer on or prior to the date hereof (including, without
limitation, under the Prior Debentures, the YA Bridge Debentures, and the
documents entered into in connection therewith), any agreement between the
Company Parties and the Buyer Parties entered into prior to the date hereof, any
claims for reasonable attorneys' fees and costs, and including, without
limitation, any claims relating to fees, penalties, liquidated damages, and
indemnification for losses, liabilities and expenses. The release contained in
this Section 9 is effective without regard to the legal nature of the claims
raised and without regard to whether any such claims are based upon tort,
equity, or implied or express contract. It is expressly understood and agreed
that this release shall operate as a clear and unequivocal waiver by the Company
Parties of any such claim whatsoever.

                                       21
<PAGE>

            (b) The Company acknowledges that there is a risk that after signing
this Agreement it may discover losses or claims that are released under this
Agreement, but that are presently unknown to it. The Company assumes this risk
and understands that this release shall apply to any such losses and claims. The
Company understands that this Agreement includes a full and final release
covering all known and unknown, suspected or unsuspected injuries, debts, claims
or damages which have arisen or may have arisen from any matters, acts,
omissions or dealings released in Section 9(a) above.

            (c) The Company covenants and agrees that the YA Bridge Debenture
Obligations, the Prior Debenture Obligations, and all other amounts owed in
connection therewith, together with interest accrued and accruing thereon, and
any applicable redemption premiums now or hereafter payable by the Company to
the Buyer are unconditionally owing by the Company to the Buyer, without offset,
setoff, defense or counterclaim of any kind, nature or description whatsoever.

            (d) From and after the date hereof, notwithstanding any prior
agreements between the Company and the Buyer (whether written, oral, or
otherwise), and except as set forth in the Amendment to the Prior Debentures and
the YA Bridge Debentures entered into on the date hereof, any and all prior
conversion limitations, lockup agreement of the Buyer, or restrictions of the
Buyer regarding the sale of the Common Stock of the Company shall be null and
void.

            (e) Acknowledgement of Security Interests. The Company hereby
acknowledges, confirms and agrees that the Buyer has and shall continue to have
valid, enforceable and perfected liens upon and security interests in the
Pledged Property heretofore granted to the Buyer pursuant to the Security
Agreement or otherwise granted to or held by the Buyer.

      10. 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 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.

                                       22
<PAGE>

            (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 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
                               6 East River Piers
                               Downtown Manhattan Heliport
                               New York, NY 10004
                               Attention: Chief Executive Officer
                               Telephone: (212) 248-2002
                               Facsimile: (212) 248-0940

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

                                       23
<PAGE>

      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.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer. The Buyer may assign
this Agreement upon 30 days' prior written notice to the Company, provided the
assignee is capable of and agrees to comply with the terms and conditions of
this Agreement and the Transaction Documents in their entirety and provided
further that such assignment would not result in a violation of U.S. Department
of Transportation regulations applicable to the Company.

            (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 contained
herein, the agreements and covenants contained herein, and the indemnification
provisions set forth in Section 8, shall survive the Closing for a period of two
(2) years following the date on which the all amounts owed to the Buyer pursuant
to the Prior Debentures and the Bridge Loans are paid in full. The Buyer 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 First 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; provided, however, that if this Agreement is terminated by the
Company pursuant to this Section 9(l), the Company shall remain obligated to
reimburse the Buyer(s) for the fees and expenses of Yorkville Advisors LLC
described in Section 4(g) above.

                                       24
<PAGE>

            (m) Brokerage. The Company represents that no broker, agent, finder
or other party, including officers, directors, employees, or affiliates of the
Company (collectively, "Broker") has been retained by it in connection with the
transactions contemplated hereby and that no fee or commission (in any form,
whether cash, notes, stock, warrants, or convertible securities) has been agreed
by the Company, or will be paid by the Company to any Broker for or on account
of the transactions contemplated hereby. Notwithstanding the foregoing, the
Company shall be permitted to pay a commission of up to 3.33% of the Purchase
Price to a third party; provided, however, that the debenture financing
completed by the parties hereto as of March 14, 2008 shall be considered an
advance against the Purchase Price hereunder and that no commissions shall be
paid in connection therewith.

            (n) 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.

            (o) The Company acknowledges that it has previously raised capital
(the "Issuance") by the issuance of convertible debt and warrants with a fixed
conversion price and exercise price of $0.30 per share. Pursuant to the terms of
all convertible debt and warrants held by the Buyer, the Company further
acknowledges that the fixed conversion price of such convertible debt and the
exercise price of such warrants have been adjusted to $0.30 per share as a
result of the Issuance. The Buyer hereby waives on a one-time basis any
anti-dilution protection or other similar provision in such warrants that may
otherwise apply in connection with the price adjustment described herein.

            (p) The Company shall amend and restate all convertible debt and
warrants held by the Investor to be consistent with the preceding paragraph. To
the extent possible, the convertible debt and warrants shall be consolidated in
a manner that will not result in the loss of tacking to the holding period of
the original security under Rule 144 promulgated under the Securities Act of
1933, as amended.

                    [REMAINDER PAGE INTENTIONALLY LEFT BLANK]

                                       25
<PAGE>

      IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to 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: Chief Executive Officer and President

                                    BUYERS:
                                    YA GLOBAL INVESTMENTS, L.P.

                                    By:    Yorkville Advisors, LLC
                                    Its:   Investment Manager

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

                                       26
<PAGE>

                                   SCHEDULE I

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
             (1)                     (2)       (3)   (4)          (5)          (6)      (7)               (8)
            BUYER                   SUBSCRIPTION AMOUNT        NUMBER OF                         LEGAL REPRESENTATIVE'S
                                                             WARRANT SHARES                            ADDRESS AND
                                                                                                     FACSIMILE NUMBER
                               FIRST CLOSING                FIRST CLOSING
<S>                            <C>                          <C>                                <C>
YA GLOBAL INVESTMENTS, L.P.    $1,250,000                   2,783,333 Shares                   Troy Rillo, Esq.
                                                            @ $0.01                            101 Hudson Street, Suite 3700
101 Hudson Street,                                                                             Jersey City, New Jersey 07302
Suite 3700                                                                                     Telephone: (201) 985-8300
Jersey City, NJ  07302                                                                         Facsimile: (201) 985-8266
Attention: Mark Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
Residence:  Cayman Islands
</TABLE>

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