SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
October 21, 2005 among OneTravel  Holdings,  Inc., a Delaware  corporation  (the
"Company"),  and each purchaser  identified on the signature pages hereto (each,
including  its  successors  and assigns,  a  "Purchaser"  and  collectively  the
"Purchasers").

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and  pursuant to Section  4(2) of the  Securities  Act of 1933,  as amended (the
"Securities  Act") and Rule 506 promulgated  thereunder,  the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase  from the Company,  securities  of the Company as more fully
described in this Agreement.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement:  (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein),  and (b) the
following terms have the meanings indicated in this Section 1.1:

            "Action"  shall have the  meaning  ascribed  to such term in Section
      3.1(j).

            "Affiliate"  means any Person that,  directly or indirectly  through
      one or more  intermediaries,  controls  or is  controlled  by or is  under
      common  control  with a Person,  as such  terms are used in and  construed
      under Rule 144 under the Securities Act. With respect to a Purchaser,  any
      investment  fund or managed  account  that is  managed on a  discretionary
      basis by the same  investment  manager as such Purchaser will be deemed to
      be an Affiliate of such Purchaser.

            "Closing"  means  the  closing  of  the  purchase  and  sale  of the
      Securities pursuant to Section 2.1.

            "Closing  Date" means the  Trading  Day when all of the  Transaction
      Documents  have been  executed  and  delivered by the  applicable  parties
      thereto, and all conditions  precedent to (i) the Purchasers'  obligations
      to pay the  Subscription  Amount  and (ii) the  Company's  obligations  to
      deliver the Securities have been satisfied or waived.

            "Commission" means the Securities and Exchange Commission.
<PAGE>

            "Common  Stock"  means the common  stock of the  Company,  par value
      $0.04 per  share,  and any  other  class of  securities  into  which  such
      securities may hereafter have been reclassified or changed into.

            "Common Stock  Equivalents"  means any  securities of the Company or
      the Subsidiaries  which would entitle the holder thereof to acquire at any
      time Common Stock,  including,  without  limitation,  any debt,  preferred
      stock, rights,  options,  warrants or other instrument that is at any time
      convertible into or exercisable or exchangeable for, or otherwise entitles
      the holder thereof to receive, Common Stock.

            "Company Counsel" means Katten Muchin Rosenman LLP.

            "Conversion  Price" shall have the meaning  ascribed to such term in
      the Debentures.

            "Debentures"  means,  the 9%  Secured  Convertible  Debentures  due,
      subject to the terms  therein,  three  years from their date of  issuance,
      issued by the Company to the Purchasers hereunder,  in the form of Exhibit
      A.

            "Disclosure  Schedules" shall have the meaning ascribed to such term
      in Section 3.1.

            "Effective  Date"  means  the  date  that the  initial  Registration
      Statement  filed  by  the  Company  pursuant  to the  Registration  Rights
      Agreement is first declared effective by the Commission.

            "Escrow  Agent"  shall  have the  meaning  set  forth in the  Escrow
      Agreement.

            "Escrow  Agreement" shall mean the Escrow Agreement in substantially
      the form of Exhibit E hereto executed and delivered contemporaneously with
      this Agreement.

            "Evaluation  Date" shall have the  meaning  ascribed to such term in
      Section 3.1(r).

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
      amended, and the rules and regulations promulgated thereunder.

            "Exempt  Issuance"  means the issuance of (a) shares of Common Stock
      or options to  employees,  officers  or  directors  of the  Company or any
      Subsidiary  pursuant  to any stock or option  plan of the  Company  or any
      Subsidiary  (i)  existing on the date  hereof,  or (ii) duly  adopted by a
      majority  of the  non-employee  members of the Board of  Directors  of the
      Company  or a  majority  of the  members of a  committee  of  non-employee
      directors  established  for such purpose  following  the date hereof,  (b)
      securities  upon  the  exercise  or  exchange  of  or  conversion  of  any
      Securities issued hereunder and/or securities  exercisable or exchangeable
      for or convertible  into shares of Common Stock issued and  outstanding on
      the date of this  Agreement,  provided that such  securities have not been
      amended (other than any change which is automatic or otherwise required in
      accordance  with the  terms  of such  securities)  since  the date of this
      Agreement  to increase  the number of such  securities  or to decrease the
      exercise,  exchange or  conversion  price of any such  securities  and (c)
      securities  issued  pursuant to  acquisitions  or strategic  transactions,
      provided any such  issuance  shall only be to a Person which is, itself or
      through its subsidiaries or business(es)  owned, an operating company in a
      business  synergistic  with the  business  of the Company and in which the
      Company  reasonably  expects  to  receive  benefits  in  addition  to  the
      investment  of funds,  but shall not  include a  transaction  in which the
      Company is issuing securities primarily for the purpose of raising capital
      or to an entity whose primary business is investing in securities.


                                       2
<PAGE>

            "Farequest Note" means that certain Secured  Convertible  Promissory
      Note issued by Farequest as of March 27, 2004 in the  principal  amount of
      $1,300,000 to CSDH Holdings, LLC.

            "Farequest Note Documents" means the Farequest Note and that certain
      Security  Agreement,  dated as of March 27, 2004, by and between Farequest
      and CSDH Holdings, LLC.

            "FW"  means  Feldman  Weinstein  LLP  with  offices  located  at 420
      Lexington Avenue, Suite 2620, New York, New York 10170-0002.

            "GAAP"  shall  have the  meaning  ascribed  to such term in  Section
      3.1(h).

            "Intellectual  Property  Rights" shall have the meaning  ascribed to
      such term in Section 3.1(o).

            "Legend  Removal Date" shall have the meaning  ascribed to such term
      in Section 4.1(c).

            "Liens" means a lien, charge, security interest,  encumbrance, right
      of first refusal, preemptive right or other restriction.

            "Material  Adverse  Effect" shall have the meaning  assigned to such
      term in Section 3.1(b).

            "Material  Permits" shall have the meaning  ascribed to such term in
      Section 3.1(m).

            "Maximum  Rate"  shall  have the  meaning  ascribed  to such term in
      Section 5.17.

            "OneTravel  Sellers"  means  collectively,  Amadeus  Americas,  Inc.
      Avanti  Management,   Inc.,  Libra  Securities,  LLC  and  Terra  Networks
      Asociadas, S.L.

            "Participation Maximum" shall have the meaning ascribed to such term
      in Section 4.12.

            "Permitted  Liens"  shall have the meaning  ascribed to such term in
      the Debentures.


                                       3
<PAGE>

            "Person"  means an individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or other entity of any kind.

            "Pre-Notice" shall have the meaning ascribed to such term in Section
      4.12.

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Purchaser  Party"  shall have the meaning  ascribed to such term in
      Section 4.10.

            "Registration   Rights  Agreement"  means  the  Registration  Rights
      Agreement, dated the date hereof, among the Company and the Purchasers, in
      the form of Exhibit B attached hereto.

            "Registration  Statement" means a registration statement meeting the
      requirements set forth in the  Registration  Rights Agreement and covering
      the resale of the  Underlying  Shares by each Purchaser as provided for in
      the Registration Rights Agreement.

            "Required Approvals" shall have the meaning ascribed to such term in
      Section 3.1(e).

            "Required  Minimum"  means,  as of any date,  the maximum  aggregate
      number of shares of Common  Stock then issued or  potentially  issuable in
      the future pursuant to the Transaction Documents, including any Underlying
      Shares  issuable  upon  exercise or conversion in full of all Warrants and
      Debentures  (including Underlying Shares issuable as payment of interest),
      ignoring any conversion or exercise limits set forth therein, and assuming
      that  the  Conversion  Price  is at all  times  on and  after  the date of
      determination  75%  of the  then  Conversion  Price  on  the  Trading  Day
      immediately prior to the date of determination.

            "Rule 144" means Rule 144 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same effect as such Rule.

            "SEC  Reports"  shall  have the  meaning  ascribed  to such  term in
      Section 3.1(h).

            "Securities" means the Debentures,  the Warrants, the Warrant Shares
      and the Underlying Shares.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Security  Agreement" means the Security  Agreement,  dated the date
      hereof, among the Company,  the Subsidiary  Guarantors and the Purchasers,
      in the form of Exhibit G attached hereto.


                                       4
<PAGE>

            "Security Documents" means the Security Agreement and the Subsidiary
      Guarantee  and any other  documents and filings  contemplated  thereunder,
      including all UCC-1 financing statements.

            "Seller Note  Documents"  means the Seller  Notes and those  certain
      Security  Agreements,  dated as of April  15,  2005,  by and  between  the
      Company and each of the OneTravel Sellers.

            "Seller  Notes" means those certain  Promissory  Notes issued by the
      Company on April 15, 2005 in aggregate  principal amount of $12,500,000 to
      the OneTravel Sellers.

            "Shareholder Approval" means such approval as may be required by the
      applicable  rules and  regulations  of the American Stock Exchange (or any
      successor entity) from the shareholders of the Company with respect to the
      transactions  contemplated  by the  Transaction  Documents,  including the
      issuance  of all of the  Underlying  Shares  and  shares of  Common  Stock
      issuable  upon  exercise of the Warrants in excess of 19.99% of the issued
      and outstanding Common Stock on the Closing Date.

            "Short Sales" shall include all "short sales" as defined in Rule 200
      of Regulation SHO under the Exchange Act.

            "Subscription  Amount" means,  as to each  Purchaser,  the aggregate
      amount to be paid for  Debentures  and  Warrants  purchased  hereunder  as
      specified  below  such  Purchaser's  name  on the  signature  page of this
      Agreement and next to the heading "Subscription  Amount", in United States
      Dollars and in immediately available funds.

            "Subsequent  Financing" shall have the meaning ascribed to such term
      in Section 4.12.

            "Subsequent  Financing  Notice"  shall have the meaning  ascribed to
      such term in Section 4.12.

            "Subsidiary"  means any  subsidiary  of the  Company as set forth on
      Schedule 3.1(a).

            "Subsidiary Guarantee" means the Subsidiary Guarantee, dated the
      date hereof, among each of the Subsidiary Guarantors and the Purchasers,
      in the form of Exhibit H attached hereto.

            "Subsidiary Guarantors" means each of the Farequest Holdings, Inc.,
      a Delaware corporation, and OneTravel, Inc., a Texas corporation.

            "Trading  Day" means a day on which the Common  Stock is traded on a
      Trading Market.

            "Trading  Market" means the following  markets or exchanges on which
      the Common  Stock is listed or quoted for trading on the date in question:
      the Nasdaq  SmallCap  Market,  the American Stock  Exchange,  the New York
      Stock Exchange or the Nasdaq National Market.


                                       5
<PAGE>

            "Transaction  Documents" means this Agreement,  the Debentures,  the
      Warrants, the Registration Rights Agreement,  all Security Documents,  the
      Escrow  Agreement  and any  other  documents  or  agreements  executed  in
      connection with the transactions contemplated hereunder.

            "Underlying  Shares"  means the  shares of Common  Stock  issued and
      issuable  upon  conversion  of the  Debentures  and upon  exercise  of the
      Warrants  and issued and  issuable in lieu of the cash payment of interest
      on the Debentures in accordance with the terms of the Debentures.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies:  (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest  preceding date) on the Trading
      Market on which the Common  Stock is then  listed or quoted as reported by
      Bloomberg  Financial L.P.  (based on a Trading Day from 9:30 a.m.  Eastern
      Time to 4:00 p.m.  Eastern  Time or such other time as the Trading  Market
      publicly announces as the official closing time of the Trading Market; (b)
      if the Common  Stock is not then listed or quoted on a Trading  Market and
      if prices for the Common Stock are then quoted on the OTC Bulletin  Board,
      the volume  weighted  average  price of the Common Stock for such date (or
      the nearest  preceding date) on the OTC Bulletin Board;  (c) if the Common
      Stock is not then listed or quoted on the OTC Bulletin Board and if prices
      for the Common Stock are then reported in the "Pink  Sheets"  published by
      the Pink Sheets,  LLC (or a similar  organization or agency  succeeding to
      its functions of reporting prices), the most recent bid price per share of
      the Common Stock so reported;  or (d) in all other cases,  the fair market
      value of a share of Common Stock as determined by an independent appraiser
      selected in good faith by the Purchasers and reasonably  acceptable to the
      Company.

            "Warrants" means collectively the Common Stock purchase warrants, in
      the form of  Exhibit C  delivered  to the  Purchasers  at the  Closing  in
      accordance with Section 2.2(a) hereof, which Warrants shall be exercisable
      beginning 181 days after the date hereof and have a term of exercise equal
      to five years.

            "Warrant  Shares"  means the shares of Common  Stock  issuable  upon
      exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

      2.1  Closing.  On the  Closing  Date,  upon the terms and  subject  to the
conditions set forth herein,  concurrent with the execution and delivery of this
Agreement by the parties hereto,  the Company agrees to sell, and each Purchaser
agrees  to  purchase  in  the  aggregate,  severally  and  not  jointly,  up  to
$13,500,000 principal amount of the Debentures.  Each Purchaser shall deliver to
the Company via wire transfer or a certified check  immediately  available funds
equal to  their  Subscription  Amount  and the  Company  shall  deliver  to each
Purchaser  their  respective  Debenture and Warrants as  determined  pursuant to
Section  2.2(a) and the other  items set forth in Section  2.2  issuable  at the
Closing.  Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3,
the  Closing  shall  occur at the  offices  of the Escrow  Agent,  or such other
location as the parties shall mutually agree.


                                       6
<PAGE>

      2.2  Deliveries.

            (a)  On or  prior  to the  Closing  Date,  the  Company  shall  have
      delivered or caused to be delivered to the Escrow Agent the following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a  legal  opinion  of  Company  Counsel,  in the  form of
            Exhibit D attached hereto;

                  (iii)  a  Debenture  with a  principal  amount  equal  to such
            Purchaser's  Subscription  Amount,  registered  in the  name of such
            Purchaser;

                  (iv) a Warrant  registered  in the name of such  Purchaser  to
            purchase  up to a number of shares of Common  Stock  equal to 40% of
            such  Purchaser's  Subscription  Amount  divided  by the  Conversion
            Price, with an exercise price equal to the Conversion Price, subject
            to adjustment therein;

                  (v) the  Registration  Rights  Agreement  duly executed by the
            Company;

                  (vi) the Escrow Agreement duly executed by the Company; and

                  (vii) the Security Agreement, duly executed by the Company and
            the Subsidiary Guarantors, along with all other Security Documents.

            (b) On the Closing Date, each Purchaser shall deliver or cause to be
      delivered to the Escrow Agent the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's  Subscription Amount by wire transfer to
            the account as specified in writing by the Company;

                  (iii) the Escrow  Agreement  duly executed by such  Purchaser;
            and

                  (iv) the  Registration  Rights Agreement duly executed by such
            Purchaser.

      2.3 Closing Conditions.

            (a) The obligations of the Company  hereunder in connection with the
      Closing are subject to the following conditions being met:


                                       7
<PAGE>

                  (i) the accuracy in all material respects when made and on the
            Closing Date of the representations and warranties of the Purchasers
            contained herein;

                  (ii)  all   obligations,   covenants  and  agreements  of  the
            Purchasers  required to be performed at or prior to the Closing Date
            shall have been performed; and

                  (iii) the delivery by the Purchasers of the items set forth in
            Section 2.2(b) of this Agreement.

            (b)  The  respective  obligations  of the  Purchasers  hereunder  in
      connection with the Closing are subject to the following  conditions being
      met:

                  (i) the accuracy in all material  respects on the Closing Date
            of the  representations  and  warranties  of the  Company  contained
            herein;

                  (ii) all obligations,  covenants and agreements of the Company
            required to be  performed at or prior to the Closing Date shall have
            been performed;

                  (iii) the  delivery  by the  Company of the items set forth in
            Section 2.2(a) of this Agreement;

                  (iv) there  shall have been no  Material  Adverse  Effect with
            respect to the Company since the date hereof;

                  (v) receipt by the Escrow Agent of Subscription Amounts of not
            less than  $10,000,000  in the  aggregate  on or before  October 31,
            2005; and

                  (vi) from the date hereof to the Closing Date,  trading in the
            Common Stock shall not have been suspended by the Commission (except
            for any suspension of trading of limited  duration  agreed to by the
            Company, which suspension shall be terminated prior to the Closing),
            and, at any time prior to the Closing  Date,  trading in  securities
            generally as reported by Bloomberg  Financial Markets shall not have
            been  suspended  or limited,  or minimum  prices shall not have been
            established on securities whose trades are reported by such service,
            or on any Trading Market,  nor shall a banking  moratorium have been
            declared  either by the United States or New York State  authorities
            nor shall there have occurred any material outbreak or escalation of
            hostilities  or other  national  or  international  calamity of such
            magnitude in its effect on, or any material  adverse  change in, any
            financial market which, in each case, in the reasonable  judgment of
            each Purchaser,  makes it  impracticable  or inadvisable to purchase
            the Debentures at the Closing.


                                       8
<PAGE>

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company.  Except as set forth in
the SEC  Reports  (as  defined in Section  3.1(h)),  or under the  corresponding
section of the disclosure  schedules  delivered to the  Purchasers  concurrently
herewith (the "Disclosure Schedules") which Disclosure Schedules shall be deemed
a part hereof, the Company hereby makes the  representations  and warranties set
forth below to each Purchaser.

            (a) Subsidiaries. All of the direct and indirect subsidiaries of the
      Company are set forth on Schedule  3.1(a).  The Company owns,  directly or
      indirectly,  all of the capital  stock or other  equity  interests of each
      Subsidiary  free and clear of any Liens and all the issued and outstanding
      shares of capital  stock of each  Subsidiary  are  validly  issued and are
      fully paid,  non-assessable  and free of preemptive  and similar rights to
      subscribe for or purchase securities.

            (b)  Organization  and  Qualification.  The  Company and each of the
      Subsidiaries  is an  entity  duly  incorporated  or  otherwise  organized,
      validly  existing and in good standing under the laws of the  jurisdiction
      of its  incorporation or organization (as applicable),  with the requisite
      power and authority to own and use its  properties and assets and to carry
      on its  business  as  currently  conducted.  Neither  the  Company nor any
      Subsidiary  is in  violation  or default of any of the  provisions  of its
      respective  certificate  or  articles  of  incorporation,  bylaws or other
      organizational  or  charter  documents.   Each  of  the  Company  and  the
      Subsidiaries is duly qualified to conduct business and is in good standing
      as a foreign corporation or other entity in each jurisdiction in which the
      nature  of the  business  conducted  or  property  owned by it makes  such
      qualification necessary, except where the failure to be so qualified or in
      good  standing,  as the  case may be,  could  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 and the  Subsidiaries,
      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.

            (c)  Authorization;  Enforcement.  The  Company  has  the  requisite
      corporate  power  and  authority  to  enter  into  and to  consummate  the
      transactions  contemplated  by  each  of  the  Transaction  Documents  and
      otherwise  to carry out its  obligations  hereunder  and  thereunder.  The
      execution and delivery of each of the Transaction Documents by the Company
      and the consummation by it of the transactions  contemplated  thereby have
      been duly  authorized by all  necessary  action on the part of the Company
      and no further  action is required by the Company,  its board of directors
      or its stockholders in connection  therewith other than in connection with
      the  Required  Approvals.  Each  Transaction  Document  has  been (or upon
      delivery will have been) duly executed by the Company and, when  delivered
      in accordance with the terms hereof and thereof, will constitute the valid
      and binding obligation of the Company  enforceable  against the Company in
      accordance  with its terms  except (i) as  limited  by  general  equitable
      principles  and   applicable   bankruptcy,   insolvency,   reorganization,
      moratorium and other laws of general application  affecting enforcement of
      creditors'  rights  generally,  (ii) as  limited by laws  relating  to the
      availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution  provisions
      may be limited by applicable law.


                                       9
<PAGE>

            (d) No Conflicts.  The  execution,  delivery and  performance of the
      Transaction  Documents by the Company and the  consummation by the Company
      of the other transactions  contemplated hereby and thereby do not and will
      not: (i) conflict  with or violate any  provision of the  Company's or any
      Subsidiary's  certificate  or articles of  incorporation,  bylaws or other
      organizational or charter documents,  or (ii) conflict with, or constitute
      a default  (or an event  that with  notice or lapse of time or both  would
      become a default)  under,  result in the  creation of any Lien  (except as
      contemplated  by the Security  Documents)  upon any of the  properties  or
      assets of the Company or any  Subsidiary,  or give to others any rights of
      termination,  amendment,  acceleration  or  cancellation  (with or without
      notice,  lapse  of  time or  both)  of,  any  material  agreement,  credit
      facility,  debt or other  material  instrument  (evidencing  a Company  or
      Subsidiary debt or otherwise) or other material understanding to which the
      Company or any  Subsidiary is a party or by which any property or asset of
      the Company or any  Subsidiary  is bound or affected,  or (iii) subject to
      the Required Approvals, conflict with or result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of  any  court  or  governmental  authority  to  which  the  Company  or a
      Subsidiary is subject  (including  federal and state  securities  laws and
      regulations),  or by which  any  property  or asset  of the  Company  or a
      Subsidiary  is bound or  affected;  except in the case of each of  clauses
      (ii) and (iii), such as could not have or reasonably be expected to result
      in a Material Adverse Effect.

            (e) Filings,  Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any  filing or  registration  with,  any  court or other  federal,
      state, local or other governmental authority or other Person in connection
      with  the  execution,  delivery  and  performance  by the  Company  of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.6, (ii) the filing with the  Commission of the  Registration  Statement,
      (iii) the notice and/or  application(s) to each applicable  Trading Market
      for the issuance and sale of the  Debentures  and Warrants and the listing
      of the  Underlying  Shares  for  trading  thereon  in the time and  manner
      required  thereby,  (iv) the filing of Form D with the Commission and such
      filings as are required to be made under  applicable state securities laws
      and (v) Shareholder Approval (collectively, the "Required Approvals").

            (f) Issuance of the  Securities.  The Securities are duly authorized
      and,  when  issued  and  paid  for  in  accordance   with  the  applicable
      Transaction  Documents,  will be duly and validly  issued,  fully paid and
      nonassessable,  free and clear of all Liens  imposed by the Company  other
      than restrictions on transfer  provided for in the Transaction  Documents.
      The  Underlying  Shares,  when issued in accordance  with the terms of the
      Transaction   Documents,   will  be   validly   issued,   fully  paid  and
      nonassessable,  free and clear of all Liens  imposed by the  Company.  The
      Company has reserved  from its duly  authorized  capital stock a number of
      shares of Common  Stock for  issuance  of the  Underlying  Shares at least
      equal to the Required Minimum on the date hereof.


                                       10
<PAGE>

            (g)  Capitalization.  The  capitalization  of the  Company is as set
      forth on Schedule  3.1(g).  The  Company has not issued any capital  stock
      since its most  recently  filed  periodic  report under the Exchange  Act,
      other than  pursuant to the exercise of employee  stock  options under the
      Company's  stock option  plans,  the issuance of shares of Common Stock to
      employees  pursuant to the  Company's  employee  stock  purchase  plan and
      pursuant  to the  conversion  or  exercise  of  outstanding  Common  Stock
      Equivalents.  No Person has any right of first refusal,  preemptive right,
      right  of  participation,  or any  similar  right  to  participate  in the
      transactions contemplated by the Transaction Documents. Except as a result
      of the  purchase  and sale of the  Securities,  there  are no  outstanding
      options,  warrants, script rights to subscribe to, calls or commitments of
      any character whatsoever relating to, or securities, rights or obligations
      convertible into or exercisable or exchangeable  for, or giving any Person
      any right to  subscribe  for or acquire,  any shares of Common  Stock,  or
      contracts,  commitments,  understandings  or  arrangements  by  which  the
      Company  or any  Subsidiary  is or may  become  bound to issue  additional
      shares of Common Stock or Common Stock Equivalents.  The issuance and sale
      of the Securities  will not obligate the Company to issue shares of Common
      Stock or other  securities to any Person (other than the  Purchasers)  and
      will not result in a right of any holder of Company  securities  to adjust
      the exercise,  conversion,  exchange or reset price under such securities.
      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. 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  officers,  directors or stockholders  which hold at least 5% of
      the Company's outstanding Common Stock.

            (h) SEC  Reports;  Financial  Statements.  The Company has filed all
      reports,  schedules,  forms, statements and other documents required to be
      filed by it under  the  Securities  Act and the  Exchange  Act,  including
      pursuant to Section 13(a) or 15(d)  thereof,  for the two years  preceding
      the date hereof (or such shorter period as the Company was required by law
      to file such material) (the  foregoing  materials,  including the exhibits
      thereto  and   documents   incorporated   by  reference   therein,   being
      collectively referred to herein as the "SEC Reports") on a timely basis or
      has  received a valid  extension  of such time of filing and has filed any
      such SEC Reports  prior to the  expiration  of any such  extension.  As of
      their respective  dates, the SEC Reports complied in all material respects
      with the  requirements  of the Securities Act and the Exchange Act and the
      rules and regulations of the Commission promulgated  thereunder,  and none
      of the SEC  Reports,  when  filed,  contained  any untrue  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.  The
      financial  statements of the Company included in the SEC Reports comply in
      all material  respects with  applicable  accounting  requirements  and the
      rules and  regulations of the Commission with respect thereto as in effect
      at the time of filing.  Such  financial  statements  have been prepared in
      accordance with United States  generally  accepted  accounting  principles
      applied on a consistent basis during the periods involved ("GAAP"), except
      as may be otherwise  specified in such  financial  statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes  required by GAAP, and fairly  present in all material  respects
      the financial position of the Company and its consolidated subsidiaries as
      of and for the dates thereof and the results of operations  and cash flows
      for the periods then ended,  subject, in the case of unaudited statements,
      to normal, immaterial, year-end audit adjustments.


                                       11
<PAGE>

            (i) Material Changes. Since the date of the latest audited financial
      statements  included  within  the  SEC  Reports,  except  as  specifically
      disclosed in the SEC Reports,  (i) there has been no event,  occurrence or
      development that has had or that could reasonably be expected to result in
      a  Material  Adverse  Effect,  (ii)  the  Company  has  not  incurred  any
      liabilities  (contingent  or otherwise)  other than (A) trade payables and
      accrued  expenses  incurred in the ordinary course of business  consistent
      with past practice,  (B)  liabilities  not required to be reflected in the
      Company's  financial  statements  pursuant  to  GAAP  or  required  to  be
      disclosed in filings made with the  Commission  and (C)  liabilities  that
      have not had or that  would  not  reasonably  be  expected  to result in a
      Material  Adverse Effect,  (iii) the Company has not altered its method of
      accounting,  (iv) the  Company has not  declared  or made any  dividend or
      distribution  of cash or other property to its  stockholders or purchased,
      redeemed  or made any  agreements  to purchase or redeem any shares of its
      capital stock and (v) the Company has not issued any equity  securities to
      any officer,  director or Affiliate,  except pursuant to existing  Company
      stock  option  plans.  The  Company  does  not  have  pending  before  the
      Commission any request for confidential treatment of information.

            (j)  Litigation.  There  is no  action,  suit,  inquiry,  notice  of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company,  threatened  against or affecting the Company,  any Subsidiary or
      any of their  respective  properties  before or by any court,  arbitrator,
      governmental or administrative  agency or regulatory  authority  (federal,
      state,  county,  local or foreign)  (collectively,  an "Action") which (i)
      adversely  affects or challenges the legality,  validity or enforceability
      of  any  of  the  Transaction  Documents  or the  Securities  or  (ii)  is
      reasonably  expected to result in a Material  Adverse Effect.  Neither the
      Company nor any Subsidiary, nor any director or officer thereof, is or has
      been the  subject  of any  Action  involving  a claim of  violation  of or
      liability  under federal or state  securities laws or a claim of breach of
      fiduciary  duty.  There has not been, and to the knowledge of the Company,
      there is not pending or contemplated,  any investigation by the Commission
      involving the Company or any current or former  director or officer of the
      Company.  The  Commission  has not issued  any stop  order or other  order
      suspending the  effectiveness of any  registration  statement filed by the
      Company or any Subsidiary under the Exchange Act or the Securities Act.


                                       12
<PAGE>

            (k) Labor  Relations.  No material  labor dispute  exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which could  reasonably be expected to result in a Material
      Adverse Effect.

            (l)  Compliance.  Neither the Company nor any  Subsidiary  (i) is in
      default under or in material  violation of (and no event has occurred that
      has not been  waived  that,  with  notice or lapse of time or both,  would
      result in a default by the Company or any Subsidiary  under),  nor has the
      Company or any Subsidiary received notice of a claim that it is in default
      under  or  that it is in  violation  of,  any  indenture,  loan or  credit
      agreement or any other  agreement or  instrument to which it is a party or
      by which it or any of its properties is bound (whether or not such default
      or violation  has been  waived),  (ii) is in violation of any order of any
      court,  arbitrator  or  governmental  body,  or  (iii)  is or has  been in
      violation  of  any  statute,   rule  or  regulation  of  any  governmental
      authority,  including without limitation all foreign,  federal,  state and
      local laws  applicable  to its  business  except in each case as could not
      reasonably be expected to have a Material Adverse Effect.

            (m) Regulatory Permits. The Company and the Subsidiaries possess all
      certificates,   authorizations  and  permits  issued  by  the  appropriate
      federal,  state,  local or foreign  regulatory  authorities  necessary  to
      conduct  their  respective  businesses  as  described  in the SEC Reports,
      except  where  the  failure  to  possess  such  permits  could not have or
      reasonably be expected to result in a Material  Adverse Effect  ("Material
      Permits"),  and neither the Company nor any  Subsidiary  has  received any
      notice of proceedings  relating to the revocation or  modification  of any
      Material Permit.

            (n) Title to Assets. None of the Company nor any of the Subsidiaries
      own any real estate.  The Company and the Subsidiary  Guarantors have good
      and  marketable  title in all  personal  property  owned  by them  that is
      material to the business of the Company and the Subsidiary Guarantors,  in
      each case free and clear of all Liens,  except for (i) Liens in connection
      with the Seller Notes,  (ii) Liens in connection  with the Farequest Note,
      in the case of Farequest Holdings,  Inc., (iii) Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use made and  proposed to be made of such  property by the Company and the
      Subsidiary  Guarantors,  and (iv) Permitted  Liens.  Any real property and
      facilities  held under lease by the Company and the Subsidiary  Guarantors
      are held by them under valid,  subsisting and enforceable  leases of which
      the Company and the Subsidiary Guarantors are in compliance.

            (o) Patents and Trademarks.  The Company and the Subsidiaries  have,
      or have  rights to use,  all  patents,  patent  applications,  trademarks,
      trademark applications,  service marks, trade names, copyrights,  licenses
      and other similar rights  necessary or material for use in connection with
      their respective  businesses as described in the SEC Reports and which the
      failure to so have could reasonably be expected to have a Material Adverse
      Effect  (collectively,  the "Intellectual  Property Rights").  Neither the
      Company  nor any  Subsidiary  has  received  a  written  notice  that  the
      Intellectual  Property  Rights  used  by the  Company  or  any  Subsidiary
      violates or infringes  upon the rights of any Person.  To the knowledge of
      the Company,  all such  Intellectual  Property  Rights are enforceable and
      there  is no  existing  infringement  by  another  Person  of  any  of the
      Intellectual Property Rights of the Company or its Subsidiaries.


                                       13
<PAGE>

            (p)  Insurance.  The  Company  and the  Subsidiaries  are insured by
      insurers of recognized  financial  responsibility  against such losses and
      risks and in such amounts as are prudent and  customary in the  businesses
      in which the Company and the Subsidiaries are engaged,  including, but not
      limited to,  directors  and  officers  insurance  coverage as set forth on
      Schedule  3.1(p).  To the best  knowledge of the Company,  such  insurance
      contracts and policies are accurate and complete.  Neither the Company nor
      any Subsidiary has any reason to believe that it will not be able to renew
      its existing  insurance  coverage as and when such coverage  expires or to
      obtain  similar  coverage  from  similar  insurers as may be  necessary to
      continue its business.

            (q) Transactions With Affiliates and Employees.  Except as set forth
      in the SEC Reports,  none of the officers or directors of the Company and,
      to the  knowledge of the Company,  none of the employees of the Company is
      presently a party to any  transaction  with the Company or any  Subsidiary
      (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 entity in which
      any officer,  director, or any such employee has a substantial interest or
      is an officer,  director,  trustee or  partner,  in each case in excess of
      $60,000  other  than (i) for  payment  of  salary or  consulting  fees for
      services  rendered,  (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits,  including stock option
      agreements under any stock option plan of the Company.

            (r) Sarbanes-Oxley;  Internal Accounting Controls. The Company is in
      material  compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are  applicable  to it as of the Closing  Date.  The Company and the
      Subsidiaries  maintain 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 GAAP and to maintain asset  accountability,
      (iii) access to assets is permitted only in accordance  with  management's
      general or specific  authorization,  and (iv) the recorded  accountability
      for assets is compared with the existing  assets at  reasonable  intervals
      and  appropriate  action is taken  with  respect to any  differences.  The
      Company has established  disclosure controls and procedures (as defined in
      Exchange Act Rules  13a-15(e) and  15d-15(e)) for the Company and designed
      such   disclosure   controls  and   procedures  to  ensure  that  material
      information relating to the Company,  including its Subsidiaries,  is made
      known  to  the  certifying  officers  by  others  within  those  entities,
      particularly  during the period in which the Company's  Form 10-K or 10-Q,
      as the case may be, is being prepared.  The Company's  certifying officers
      have evaluated the effectiveness of the Company's  disclosure controls and
      procedures  in  accordance  with  Item 307 of  Regulation  S-K  under  the
      Exchange Act as of the Company's most recent fiscal  quarter-end or fiscal
      year-end (such date, the "Evaluation  Date"). The Company presented in its
      most recently filed periodic report under the Exchange Act the conclusions
      of the  certifying  officers  about the  effectiveness  of the  disclosure
      controls and  procedures  based on their  evaluations as of the Evaluation
      Date.  Since  the  Evaluation  Date,  there  have been no  changes  in the
      Company's  internal  controls  (as such term is defined in Rule  13a-15(7)
      under the  Exchange  Act) that has  materially  affected or is  reasonably
      likely to materially affect the Company's internal controls over financial
      reporting.


                                       14
<PAGE>

            (s) Certain Fees. No brokerage or finder's fees or  commissions  are
      or will be payable  by the  Company to any  broker,  financial  advisor or
      consultant,  finder,  placement agent,  investment  banker,  bank or other
      Person with respect to the  transactions  contemplated  by the Transaction
      Documents.  The  Purchasers  shall have no obligation  with respect to any
      fees or with  respect to any claims made by or on behalf of other  Persons
      against  the  Company  or its  Subsidiaries  or any  of  their  respective
      directors or officers for fees of a type contemplated in this Section that
      may  be  due in  connection  with  the  transactions  contemplated  by the
      Transaction Documents.

            (t) Private  Placement.  Assuming  the  accuracy of the  Purchasers'
      representations  and warranties set forth in Section 3.2, no  registration
      under  the  Securities  Act is  required  for the  offer  and  sale of the
      Securities by the Company to the Purchasers as  contemplated  hereby.  The
      issuance and sale of the  Securities  hereunder  does not  contravene  the
      rules and regulations of the Trading Market.

            (u) Investment Company.  The Company is not, and is not an Affiliate
      of, and immediately  after receipt of payment for the Securities,  it 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.

            (v)  Registration  Rights.  Other  than each of the  Purchasers,  no
      Person has any right to cause the Company to effect the registration under
      the Securities Act of any securities of the Company.

            (w) Listing and Maintenance Requirements. The Company's Common Stock
      is  registered  pursuant to Section  12(g) of the  Exchange  Act,  and the
      Company  has taken no action  designed  to, 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 Commission is contemplating  terminating such  registration.  The
      Company  has not, in the 12 months  preceding  the date  hereof,  received
      notice  from any Trading  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  Trading  Market.  The
      Company  is,  and  has no  reason  to  believe  that  it  will  not in the
      foreseeable future continue to be, in compliance with all such listing and
      maintenance requirements.


                                       15
<PAGE>

            (x) Application of Takeover  Protections.  The Company and its Board
      of Directors have taken all necessary  action,  if any, in order to render
      inapplicable any control share acquisition,  business combination,  poison
      pill  (including  any  distribution  under a  rights  agreement)  or other
      similar  anti-takeover   provision  under  the  Company's  Certificate  of
      Incorporation  (or similar charter  documents) or the laws of its state of
      incorporation  that is or could become  applicable to the  Purchasers as a
      result of the Purchasers and the Company  fulfilling their  obligations or
      exercising their rights under the Transaction Documents, including without
      limitation as a result of the Company's issuance of the Securities and the
      Purchasers' ownership of the Securities.

            (y) Disclosure.  The Company  confirms that neither it nor any other
      Person  acting on its behalf has provided any of the  Purchasers  or their
      agents  or  counsel  with  any  information   that  constitutes  or  might
      constitute material,  nonpublic  information.  The Company understands and
      confirms that the  Purchasers  will rely on the foregoing  representations
      and covenants in effecting  transactions in securities of the Company. All
      disclosure provided to the Purchasers  regarding the Company, its business
      and  the  transactions   contemplated  hereby,  including  the  Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company with
      respect to the  representations  and  warranties  made herein are true and
      correct with respect to such  representations  and  warranties  and do not
      contain  any  untrue  statement  of a  material  fact or omit to state any
      material fact necessary in order to make the statements  made therein,  in
      light of the circumstances under which they were made, not misleading. The
      Company  acknowledges  and agrees that no Purchaser  makes or has made any
      representations   or   warranties   with   respect  to  the   transactions
      contemplated hereby other than those specifically set forth in Section 3.2
      hereof.

            (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations  and  warranties  set forth in Section  3.2,  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 cause this offering of the  Securities  to be  integrated  with
      prior  offerings by the Company for purposes of the  Securities Act or any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and  regulations of any Trading Market on which any of the
      securities of the Company are listed or designated.

            (aa) Indebtedness. The SEC Reports set forth as of the dates thereof
      all outstanding  secured and unsecured  Indebtedness of the Company or any
      Subsidiary,  or for which the Company or any Subsidiary  has  commitments.
      For the  purposes  of this  Agreement,  "Indebtedness"  shall mean (a) any
      liabilities for borrowed money or amounts owed in excess of $50,000 (other
      than trade accounts  payable incurred in the ordinary course of business),
      (b) all  guaranties,  endorsements  and other  contingent  obligations  in
      respect of Indebtedness  of others,  whether or not the same are or should
      be reflected in the Company's balance sheet (or the notes thereto), except
      guaranties  by  endorsement  of  negotiable  instruments  for  deposit  or
      collection or similar transactions in the ordinary course of business; and
      (c) the present value of any lease payments in excess of $50,000 due under
      leases  required to be  capitalized in accordance  with GAAP.  Neither the
      Company nor any Subsidiary is in default with respect to any Indebtedness.


                                       16
<PAGE>

            (bb) Tax Status.  Except for matters that would not, individually or
      in the  aggregate,  have or reasonably be expected to result in a Material
      Adverse  Effect,  the Company and each  Subsidiary has filed all necessary
      federal,  state and foreign  income and franchise tax returns and has paid
      or  accrued  all  taxes  shown  as due  thereon,  and the  Company  has no
      knowledge  of a tax  deficiency  which  has been  asserted  or  threatened
      against the Company or any Subsidiary.

            (cc) No General  Solicitation.  Neither  the  Company nor any person
      acting on behalf of the Company has offered or sold any of the  Securities
      by any form of general  solicitation or general  advertising.  The Company
      has offered the  Securities  for sale only to the  Purchasers  and certain
      other  "accredited  investors"  within  the  meaning of Rule 501 under the
      Securities Act.

            (dd) Foreign  Corrupt  Practices.  Neither the  Company,  nor to the
      knowledge  of the Company,  any agent or other person  acting on behalf of
      the Company,  has (i) directly or indirectly,  used any funds for unlawful
      contributions,  gifts, entertainment or other unlawful expenses related to
      foreign or domestic political activity,  (ii) made any unlawful payment to
      foreign or domestic government officials or employees or to any foreign or
      domestic political parties or campaigns from corporate funds, (iii) failed
      to  disclose  fully any  contribution  made by the Company (or made by any
      person  acting on its behalf of which the  Company  is aware)  which is in
      violation of law, or (iv)  violated in any material  respect any provision
      of the Foreign Corrupt Practices Act of 1977, as amended.

            (ee)  Accountants.  The  Company's  accountants  are  set  forth  on
      Schedule  3.1(ff) of the  Disclosure  Schedule.  To the  knowledge  of the
      Company,  such  accountants,  who the Company  expects will express  their
      opinion with  respect to the  financial  statements  to be included in the
      Company's  Annual Report on Form 10-K for the year ended June 30, 2005 are
      a registered public accounting firm as required by the Securities Act.

            (ff)  Seniority.  As of the Closing Date, no  indebtedness  or other
      equity of the  Company is senior to the  Debentures  in right of  payment,
      whether with respect to interest or upon  liquidation or  dissolution,  or
      otherwise,  other than  indebtedness  secured by purchase  money  security
      interests  (which is senior only as to underlying  assets covered  thereby
      and proceeds thereof) and capital lease obligations  (which is senior only
      as to the property covered thereby and proceeds thereof).

            (gg) No  Disagreements  with  Accountants and Lawyers.  There are no
      disagreements of any kind presently existing, or reasonably anticipated by
      the Company to arise,  between  the  accountants  and lawyers  formerly or
      presently  employed by the Company and the Company is current with respect
      to any fees owed to its accountants and lawyers.


                                       17
<PAGE>

            (hh) Acknowledgment  Regarding  Purchasers'  Purchase of Securities.
      The Company  acknowledges and agrees that each of the Purchasers is acting
      solely in the  capacity of an arm's length  purchaser  with respect to the
      Transaction  Documents  and  the  transactions  contemplated  hereby.  The
      Company  further  acknowledges  that no Purchaser is 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 any Purchaser or any of their  respective  representatives
      or  agents  in  connection  with  this  Agreement  and  the   transactions
      contemplated  hereby is merely  incidental to the Purchasers'  purchase of
      the Securities.  The Company further represents to each Purchaser that the
      Company's  decision to enter into this  Agreement has been based solely on
      the independent evaluation of the transactions  contemplated hereby by the
      Company and its representatives.

            (ii)   Acknowledgement   Regarding   Purchasers'  Trading  Activity.
      Anything  in  this   Agreement  or   elsewhere   herein  to  the  contrary
      notwithstanding  (except  for  Section  4.15  and  3.2(f)  hereof),  it is
      understood and agreed by the Company (i) that none of the Purchasers  have
      been  asked  to  agree,  nor has any  Purchaser  agreed,  to  desist  from
      purchasing or selling,  long and/or short,  securities of the Company,  or
      "derivative"  securities  based on securities  issued by the Company or to
      hold the Securities for any specified  term; (ii) that past or future open
      market or other transactions by any Purchaser,  including Short Sales, and
      specifically  including,  without limitation,  Short Sales or "derivative"
      transactions,  before  or after  the  closing  of this or  future  private
      placement  transactions,  may  negatively  impact the market  price of the
      Company's  publicly-traded  securities;  (iii)  that  any  Purchaser,  and
      counter parties in  "derivative"  transactions to which any such Purchaser
      is a party, directly or indirectly,  presently may have a "short" position
      in the Common Stock,  and (iv) that each Purchaser  shall not be deemed to
      have any affiliation  with or control over any arm's length  counter-party
      in any  "derivative"  transaction.  The Company  further  understands  and
      acknowledges that except as provided in Sections 4.15 and 3.2(f),  (a) one
      or more  Purchasers  may engage in  hedging  activities  at various  times
      during the period that the Securities are outstanding,  including, without
      limitation,  during the periods  that the value of the  Underlying  Shares
      deliverable  with respect to Securities are being  determined and (b) such
      hedging  activities  (if any)  could  reduce  the  value  of the  existing
      stockholders'  equity  interests in the Company at and after the time that
      the hedging activities are being conducted.  The Company acknowledges that
      such  aforementioned  hedging activities do not constitute a breach of any
      of the Transaction Documents.

            (jj)  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  (other than for the  placement  agent's  placement 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.


                                       18
<PAGE>

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
      organized,  validly  existing and in good  standing  under the laws of the
      jurisdiction of its organization with full right, corporate or partnership
      power and  authority  to enter  into and to  consummate  the  transactions
      contemplated by the  Transaction  Documents and otherwise to carry out its
      obligations  hereunder  and  thereunder.   The  execution,   delivery  and
      performance by such  Purchaser of the  transactions  contemplated  by this
      Agreement have been duly authorized by all necessary  corporate or similar
      action on the part of such Purchaser.  Each Transaction  Document to which
      it is a party has been duly executed by such Purchaser, and when delivered
      by such Purchaser in accordance with the terms hereof, will constitute the
      valid  and  legally  binding  obligation  of such  Purchaser,  enforceable
      against it in accordance with its terms,  except (i) as limited by general
      equitable    principles    and    applicable    bankruptcy,    insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement  of  creditors'  rights  generally,  (ii) as  limited  by laws
      relating to the availability of specific performance, injunctive relief or
      other  equitable  remedies  and  (iii)  insofar  as  indemnification   and
      contribution provisions may be limited by applicable law.

            (b) Own Account.  Such Purchaser understands that the Securities are
      "restricted  securities" and have not been registered under the Securities
      Act or any applicable state securities law and is acquiring the Securities
      as  principal  for  its  own  account  and  not  with  a  view  to or  for
      distributing or reselling such Securities or any part thereof in violation
      of the  Securities  Act or any  applicable  state  securities  law, has no
      present  intention of distributing  any of such Securities in violation of
      the  Securities  Act or any  applicable  state  securities  law and has no
      arrangement  or  understanding   with  any  other  persons  regarding  the
      distribution  of such  Securities  (this  representation  and warranty not
      limiting such  Purchaser's  right to sell the  Securities  pursuant to the
      Registration  Statement or otherwise in compliance with applicable federal
      and state  securities  laws) in  violation  of the  Securities  Act or any
      applicable   state   securities  law.  Such  Purchaser  is  acquiring  the
      Securities  hereunder  in  the  ordinary  course  of  its  business.  Such
      Purchaser  does not have  any  agreement  or  understanding,  directly  or
      indirectly, with any Person to distribute any of the Securities.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
      Securities,  it was,  and at the date  hereof  it is,  and on each date on
      which it exercises  any Warrants or converts any  Debentures it will be an
      "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
      or (a)(8) under the  Securities  Act. Such Purchaser is not required to be
      registered as a broker-dealer under Section 15 of the Exchange Act.

            (d) Experience of Such Purchaser.  Such  Purchaser,  either alone or
      together with its representatives,  has such knowledge, sophistication and
      experience  in  business  and  financial  matters  so as to be  capable of
      evaluating  the  merits  and risks of the  prospective  investment  in the
      Securities,  and has so evaluated the merits and risks of such investment.
      Such  Purchaser is able to bear the economic  risk of an investment in the
      Securities  and, at the present time, is able to afford a complete loss of
      such investment.


                                       19
<PAGE>

            (e) General  Solicitation.  Such  Purchaser  is not  purchasing  the
      Securities  as a result  of any  advertisement,  article,  notice or other
      communication   regarding  the  Securities  published  in  any  newspaper,
      magazine  or  similar  media  or  broadcast  over  television  or radio or
      presented  at any  seminar or any other  general  solicitation  or general
      advertisement.

            (f) Short Sales and Confidentiality  Prior To The Date Hereof. Other
      than  the  transaction  contemplated  hereunder,  such  Purchaser  has not
      directly or indirectly, nor has any Person acting on behalf of or pursuant
      to any understanding with such Purchaser,  executed any Short Sales in the
      securities  of the Company  during the period  commencing  from October 1,
      2005  until  the date  hereof  ("Discussion  Time").  Notwithstanding  the
      foregoing,  in the case of a Purchaser that is a multi-managed  investment
      vehicle whereby separate  portfolio  managers manage separate  portions of
      such  Purchaser's  assets  and  the  portfolio  managers  have  no  direct
      knowledge  of the  investment  decisions  made by the  portfolio  managers
      managing other portions of such Purchaser's assets, the representation set
      forth above shall only apply with respect to the portion of assets managed
      by the portfolio manager that made the investment decision to purchase the
      Securities covered by this Agreement. Other than to other Persons party to
      this Agreement,  such Purchaser has maintained the  confidentiality of all
      disclosures made to it in connection with this transaction  (including the
      existence and terms of this transaction).

            (g) Access to Information.  Such Purchaser  acknowledges  and agrees
      that it has access to the SEC Reports  and has  reviewed  such  filings as
      such Purchaser has deemed  necessary or desirable  including the Company's
      most recently  filed Annual  Report on Form 10-K and  Quarterly  Report on
      Form 10-Q.  Each  Purchaser and its respective  representatives  have been
      afforded an opportunity to ask such questions of the officers,  employees,
      agents,  accountants  and  representatives  of the Company  concerning the
      business, operations,  financial condition, assets, liabilities, and other
      relevant  matters as such  Purchaser and its  representatives  have deemed
      necessary or desirable,  and each Purchaser hereby confirms that it or its
      agents have been given all such information as has been requested in order
      to  evaluate   the  merits  and  risks  of  the   prospective   investment
      contemplated   hereby  and  that  it  does  not   desire  any   additional
      information.  Without limiting the foregoing,  each Purchaser specifically
      acknowledges  that it has had the  opportunity to review the Company's SEC
      Reports.

            (h) Risk Factors.  Such Purchaser  understands and acknowledges that
      an investment in the  Debentures  and Warrants is highly  speculative  and
      includes a high degree of risk including,  but not limited to, those risks
      specifically  set forth in both the Company's  most recently  filed Annual
      Report on Form 10-K and the Registration Statement on Form S-3/A, file no.
      333-124931, filed by the Company with the Commission on August 3, 2005.


                                       20
<PAGE>

            The Company  acknowledges  and agrees that each  Purchaser  does not
      make or has not made any representations or warranties with respect to the
      transactions  contemplated  hereby other than those specifically set forth
      in this Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The Securities may only be disposed of in compliance  with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or Rule 144, to
      the Company or to an  affiliate  of a Purchaser  or in  connection  with a
      pledge as  contemplated  in Section  4.1(b),  the  Company may require the
      transferor  thereof  to  provide  to the  Company  an  opinion  of counsel
      selected by the transferor and reasonably  acceptable to the Company,  the
      form and substance of which opinion  shall be reasonably  satisfactory  to
      the  Company,   to  the  effect  that  such   transfer  does  not  require
      registration of such transferred Securities under the Securities Act. As a
      condition of transfer,  any such  transferee  shall agree in writing to be
      bound by the  terms of this  Agreement  and  shall  have the  rights  of a
      Purchaser under this Agreement and the Registration Rights Agreement.

            (b) The Purchasers  agree to the imprinting,  so long as is required
      by this  Section  4.1(b),  of a  legend  on any of the  Securities  in the
      following form:

      [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
      ARE [EXERCISABLE]  [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
      AND  EXCHANGE  COMMISSION  OR THE  SECURITIES  COMMISSION  OF ANY STATE IN
      RELIANCE UPON AN EXEMPTION FROM  REGISTRATION  UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE  "SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE
      OFFERED OR SOLD EXCEPT  PURSUANT TO AN  EFFECTIVE  REGISTRATION  STATEMENT
      UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
      A  TRANSACTION  NOT  SUBJECT  TO,  THE  REGISTRATION  REQUIREMENTS  OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE  TRANSFEROR TO SUCH EFFECT,
      THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE COMPANY.
      THESE SECURITIES AND THE SECURITIES ISSUABLE UPON [EXERCISE]  [CONVERSION]
      OF THESE  SECURITIES MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

            The Company  acknowledges  and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin  agreement with a registered
      broker-dealer  or  grant  a  security  interest  in  some  or  all  of the
      Securities to a financial  institution that is an "accredited investor" as
      defined in Rule 501(a) under the Securities Act and who agrees to be bound
      by the provisions of this Agreement and the Registration  Rights Agreement
      and, if required under the terms of such  arrangement,  such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer  would not be subject to approval of the Company
      and no legal  opinion of legal  counsel of the pledgee,  secured  party or
      pledgor  shall be required in  connection  therewith.  Further,  no notice
      shall be required of such pledge. At the appropriate  Purchaser's expense,
      the Company will execute and deliver such  reasonable  documentation  as a
      pledgee  or  secured  party  of  Securities  may  reasonably   request  in
      connection with a pledge or transfer of the Securities,  including, if the
      Securities are subject to registration pursuant to the Registration Rights
      Agreement,   the  preparation  and  filing  of  any  required   prospectus
      supplement  under  Rule  424(b)(3)  under  the  Securities  Act  or  other
      applicable provision of the Securities Act to appropriately amend the list
      of Selling Stockholders thereunder.


                                       21
<PAGE>

            (c) Certificates  evidencing the Underlying Shares shall not contain
      any legend (including the legend set forth in Section 4.1(b) hereof):  (i)
      while a  registration  statement  (including the  Registration  Statement)
      covering  the resale of such  security is effective  under the  Securities
      Act, or (ii) following any sale of such Underlying Shares pursuant to Rule
      144, or (iii) if such  Underlying  Shares are eligible for sale under Rule
      144(k),   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 Commission).  The Company shall
      cause its counsel to issue a legal opinion to the Company's transfer agent
      promptly  after the Effective  Date if required by the Company's  transfer
      agent to effect the removal of the legend hereunder. If all or any portion
      of a Debenture or Warrant is converted or exercised (as  applicable)  at a
      time when there is an effective registration statement to cover the resale
      of the Underlying  Shares,  or if such Underlying Shares may be sold under
      Rule 144(k) or if such legend is not otherwise  required under  applicable
      requirements  of the Securities Act  (including  judicial  interpretations
      thereof) then such Underlying  Shares shall be issued free of all legends.
      The Company  agrees that  following the Effective  Date or at such time as
      such legend is no longer required under this Section  4.1(c),  it will, no
      later than three Trading Days following the delivery by a Purchaser to the
      Company or the  Company's  transfer  agent of a  certificate  representing
      Underlying  Shares, as applicable,  issued with a restrictive legend (such
      third  Trading Day,  the "Legend  Removal  Date"),  deliver or cause to be
      delivered to such Purchaser 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.  Certificates for Securities  subject to legend removal hereunder
      shall  be  transmitted  by  the  transfer  agent  of  the  Company  to the
      Purchasers by crediting the account of the  Purchaser's  prime broker with
      the Depository Trust Company System.

            (d) In addition to such Purchaser's  other available  remedies,  the
      Company shall pay to a Purchaser,  in cash, as partial  liquidated damages
      and not as a penalty,  for each $1,000 of Underlying  Shares (based on the
      VWAP of the Common Stock on the date such  Securities are submitted to the
      Company's  transfer agent) delivered for removal of the restrictive legend
      and subject to Section 4.1(c),  $10 per Trading Day (increasing to $20 per
      Trading Day 5 Trading  Days after such  damages  have begun to accrue) for
      each Trading Day after the Legend  Removal Date until such  certificate is
      delivered  without a legend.  Nothing herein shall limit such  Purchaser's
      right to pursue  actual  damages  for the  Company's  failure  to  deliver
      certificates  representing  any Securities as required by the  Transaction
      Documents,  and such Purchaser shall have the right to pursue all remedies
      available  to it at law or in  equity  including,  without  limitation,  a
      decree of specific performance and/or injunctive relief.


                                       22
<PAGE>

            (e)  Each  Purchaser,  severally  and not  jointly  with  the  other
      Purchasers,  agrees  that  the  removal  of the  restrictive  legend  from
      certificates  representing  Securities as set forth in this Section 4.1 is
      predicated  upon the  Company's  reliance  that the  Purchaser  will sell,
      transfer or otherwise  dispose of any  Securities  only pursuant to either
      the  registration  requirements  of  the  Securities  Act,  including  any
      applicable  prospectus delivery  requirements,  or an exemption therefrom,
      and each  Purchaser  hereby  agrees not to  otherwise  sell,  transfer  or
      dispose of any Securities.

            (f)  Until  the one year  anniversary  of the  Effective  Date,  the
      Company   shall  not  undertake  a  reverse  or  forward  stock  split  or
      reclassification  of the Common Stock without the prior written consent of
      the Purchasers  holding a majority in principal amount  outstanding of the
      Debentures.

      4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the  Securities  may result in dilution of the  outstanding  shares of Common
Stock,  which dilution may be substantial under certain market  conditions.  The
Company  further   acknowledges  that  its  obligations  under  the  Transaction
Documents,  including without  limitation its obligation to issue the Underlying
Shares pursuant to the Transaction  Documents,  are  unconditional  and absolute
(subject to the terms and  conditions  of such  Transaction  Documents)  and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such  dilution or any claim the  Company may have  against any
Purchaser and  regardless of the dilutive  effect that such issuance may have on
the ownership of the other stockholders of the Company.

      4.3 Furnishing of Information.  As long as any Purchaser owns  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. As long as any
Purchaser  owns  Securities,  if the  Company is not  required  to file  reports
pursuant to the Exchange Act, it will prepare and furnish to the  Purchasers and
make publicly  available in accordance  with Rule 144(c) such  information as is
required for the Purchasers to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably request,  all to the extent required from time to time
to enable such Person to sell such  Securities  without  registration  under the
Securities Act within the limitation of the exemptions provided by Rule 144.


                                       23
<PAGE>

      4.4  Integration.  The Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and regulations of any Trading Market.

      4.5  Conversion  and Exercise  Procedures.  The form of Notice of Exercise
included in the  Warrants and the form of Notice of  Conversion  included in the
Debentures set forth the totality of the  procedures  required of the Purchasers
in order to exercise the Warrants or convert the Debentures. No additional legal
opinion or other information or instructions shall be required of the Purchasers
to exercise their Warrants or convert their Debentures.  The Company shall honor
exercises of the Warrants and  conversions  of the  Debentures and shall deliver
Underlying Shares in accordance with the terms,  conditions and time periods set
forth in the Transaction Documents.

      4.6 Securities Laws Disclosure;  Publicity.  The Company shall (a) by 8:30
a.m. Eastern time on the Trading Day following the date hereof,  issue a Current
Report on Form 8-K,  reasonably  acceptable  to each  Purchaser  disclosing  the
material terms of the  transactions  contemplated  hereby,  and shall attach the
Transaction  Documents  thereto  and (b) if the  Closing  Date  is not the  date
hereof, by 8:30 a.m. Eastern time on the Trading Day following the Closing Date,
issue a Current  Report on Form 8-K,  reasonably  acceptable  to each  Purchaser
disclosing that the Closing has occurred and the aggregate  Subscription  Amount
received by the Company.  The Company and each Purchaser shall consult with each
other in issuing  any other  press  releases  with  respect to the  transactions
contemplated  hereby,  and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company,  with respect to any press release of any Purchaser,  or
without the prior consent of each  Purchaser,  with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by law or Trading  Market  regulations,  in which case the Company shall provide
the Purchasers  with prior notice of such  disclosure  permitted under subclause
(i) or (ii).

      4.7  Shareholder  Rights  Plan.  No claim will be made or  enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of  receiving  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company  and the  Purchasers  existing as of the
Closing Date. The Company shall conduct its business in a manner so that it will
not become subject to the Investment Company Act.


                                       24
<PAGE>

      4.8 Non-Public Information.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.9 Use of Proceeds.  Except as set forth on Schedule 4.9 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital  purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade  payables in the ordinary  course of
the  Company's  business  and prior  practices),  to redeem any Common  Stock or
Common Stock Equivalents or to settle any outstanding litigation.

      4.10  Indemnification  of  Purchasers.  Subject to the  provisions of this
Section  4.10,  the Company will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  members,  partners,  employees  and agents
(each,  a  "Purchaser  Party")  harmless  from any and all losses,  liabilities,
obligations,  claims, contingencies,  damages, costs and expenses, including all
judgments,  amounts paid in settlements,  court costs and reasonable  attorneys'
fees and costs of  investigation  that any such  Purchaser  Party may  suffer or
incur  as  a  result  of  or   relating   to  (a)  any  breach  of  any  of  the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other  Transaction  Documents  or (b) any action  instituted
against  a  Purchaser,  or any of them or their  respective  Affiliates,  by any
stockholder  of the  Company who is not an  Affiliate  of such  Purchaser,  with
respect to any of the  transactions  contemplated by the  Transaction  Documents
(unless such action is based upon a breach of such Purchaser's  representations,
warranties or covenants  under the  Transaction  Documents or any  agreements or
understandings  such  Purchaser  may  have  with  any  such  stockholder  or any
violations by the Purchaser of state or federal  securities  laws or any conduct
by such Purchaser which constitutes fraud, gross negligence,  willful misconduct
or  malfeasance).  If any action shall be brought against any Purchaser Party in
respect  of which  indemnity  may be sought  pursuant  to this  Agreement,  such
Purchaser  Party shall promptly  notify the Company in writing,  and the Company
shall  have the right to assume  the  defense  thereof  with  counsel of its own
choosing. Any Purchaser Party shall have the right to employ separate counsel in
any  such  action  and  participate  in the  defense  thereof,  but the fees and
expenses of such counsel shall be at the expense of such Purchaser  Party except
to the extent that (i) the employment  thereof has been specifically  authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such  defense and to employ  counsel or (iii) with  respect to
such  action  such  separate  counsel  provides  written  advice that a material
conflict  exists on any material  issue  between the position of the Company and
the  position of such  Purchaser  Party.  The Company  will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected  without  the  Company's  prior  written  consent,  which  shall not be
unreasonably  withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations,  warranties,  covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.


                                       25
<PAGE>

      4.11 Reservation and Listing of Securities; Shareholder Approval.

            (a) The Company  shall  maintain a reserve from its duly  authorized
      shares of Common Stock for issuance pursuant to the Transaction  Documents
      in such amount as may be required to fulfill its obligations in full under
      the Transaction Documents.

            (b) If, on any date,  the number of  authorized  but  unissued  (and
      otherwise  unreserved)  shares of Common  Stock is less than the  Required
      Minimum on such date, then the Board of Directors of the Company shall use
      commercially  reasonable  efforts to amend the  Company's  certificate  or
      articles  of  incorporation  to  increase  the  number of  authorized  but
      unissued  shares of Common Stock to at least the Required  Minimum at such
      time,  as soon as  possible  and in any event not later than the 100th day
      after such date.

            (c) The Company  shall:  (i) in the time and manner  required by the
      Trading  Market,  prepare and file with such Trading  Market an additional
      shares listing application  covering a number of shares of Common Stock at
      least equal to the Required Minimum on the date of such application,  (ii)
      take all steps  necessary  to cause  such  shares  of  Common  Stock to be
      approved for listing on the Trading Market as soon as possible thereafter,
      (iii)  provide  to the  Purchasers  evidence  of such  listing,  and  (iv)
      maintain  the listing of such  Common  Stock on any date at least equal to
      the  Required  Minimum  on such date on such  Trading  Market  or  another
      Trading Market.

            (d)  On  or  before  the  next  annual   meeting  of  the  Company's
      shareholders,  the  Company  shall  seek  Shareholder  Approval,  with the
      recommendation  of the Company's  Board of Directors that such proposal be
      approved,  and the Company shall solicit proxies from its  shareholders in
      connection  therewith in the same manner as all other management proposals
      in such proxy  statement and all management  appointed proxy holders shall
      vote their  proxies in favor of such  proposal.  If the  Company  does not
      obtain Shareholder Approval at the first meeting, the Company shall call a
      meeting every month  thereafter  to seek  Shareholder  Approval  until the
      earlier of the date Shareholder Approval is obtained or the Debentures are
      no longer outstanding.

      4.12 Participation in Future Financing.

            (a)  From  the  date  hereof  until  the  date  that is the 12 month
      anniversary  of the Effective  Date,  upon any financing by the Company or
      any of its  Subsidiaries  of Common Stock or Common Stock  Equivalents  (a
      "Subsequent   Financing"),   each  Purchaser   shall  have  the  right  to
      participate  in up to an amount of the Subsequent  Financing  equal to the
      Participation Maximum (as defined below).

            (b) At least 5 Trading  Days prior to the closing of the  Subsequent
      Financing, the Company shall deliver to each Purchaser a written notice of
      its  intention  to effect a  Subsequent  Financing  ("Pre-Notice"),  which
      Pre-Notice  shall ask such  Purchaser if it wants to review the details of
      such financing (such additional notice, a "Subsequent  Financing Notice").
      Upon  the  request  of a  Purchaser,  and  only  upon a  request  by  such
      Purchaser,  for a Subsequent Financing Notice, the Company shall promptly,
      but no later than 1 Trading Day after such  request,  deliver a Subsequent
      Financing Notice to such Purchaser.  The Subsequent Financing Notice shall
      describe  in  reasonable  detail  the  proposed  terms of such  Subsequent
      Financing,  the amount of proceeds intended to be raised  thereunder,  the
      Person with whom such Subsequent Financing is proposed to be effected, and
      attached  to which  shall be a term  sheet or  similar  document  relating
      thereto.


                                       26
<PAGE>

            (c)  Any  Purchaser  desiring  to  participate  in  such  Subsequent
      Financing  must  provide  written  notice to the Company by not later than
      5:30 p.m.  (New York City  time) on the 5th  Trading  Day after all of the
      Purchasers  have received the Pre-Notice  that the Purchaser is willing to
      participate in the  Subsequent  Financing,  the amount of the  Purchaser's
      participation,  and that the Purchaser has such funds ready,  willing, and
      available  for  investment  on the  terms  set  forth  in  the  Subsequent
      Financing Notice. If the Company receives no notice from a Purchaser as of
      such 5th Trading Day, such Purchaser  shall be deemed to have notified the
      Company that it does not elect to participate.

            (d) If by 5:30  p.m.  (New York City  time) on the 5th  Trading  Day
      after all of the Purchasers have received the Pre-Notice, notifications by
      the  Purchasers of their  willingness  to  participate  in the  Subsequent
      Financing  (or  to  cause  their  designees  to  participate)  is,  in the
      aggregate,  less than the total amount of the Subsequent  Financing,  then
      the Company may effect the remaining portion of such Subsequent  Financing
      on the terms and to the  Persons  set  forth in the  Subsequent  Financing
      Notice.

            (e) If by 5:30  p.m.  (New York City  time) on the 5th  Trading  Day
      after all of the  Purchasers  have  received the  Pre-Notice,  the Company
      receives  responses  to a  Subsequent  Financing  Notice  from  Purchasers
      seeking to purchase,  in the  aggregate,  more than 50% of the  Subsequent
      Financing (the  "Participation  Maximum"),  each such Purchaser shall have
      the right to  purchase  the  greater  of (a) their  Pro Rata  Portion  (as
      defined below) of the Participation Maximum and (b) the difference between
      the Participation Maximum and the aggregate amount of participation by all
      other Purchasers.  "Pro Rata Portion" is the ratio of (x) the Subscription
      Amount  of  Securities  purchased  on  the  Closing  Date  by a  Purchaser
      participating  under this  Section  4.12 and (y) the sum of the  aggregate
      Subscription  Amounts of  Securities  purchased on the Closing Date by all
      Purchasers participating under this Section 4.12.

            (f) The Company must provide the Purchasers with a second Subsequent
      Financing  Notice,  and the  Purchasers  will  again  have  the  right  of
      participation  set forth above in this  Section  4.12,  if the  Subsequent
      Financing  subject  to the  initial  Subsequent  Financing  Notice  is not
      consummated  for any  reason on the  terms  set  forth in such  Subsequent
      Financing  Notice  within 60 Trading  Days  after the date of the  initial
      Subsequent Financing Notice.

            (g) Notwithstanding the foregoing, this Section 4.12 shall not apply
      in respect of an Exempt Issuance.


                                       27
<PAGE>

      4.13 Subsequent Equity Sales.

            (a) Other than in  connection  with a financing  transaction  all or
      substantially  all of the  proceeds of which is used to  satisfy,  pay and
      discharge in full the Company's  obligations  under the Seller Notes, from
      the date  hereof  until 90 days  after the  Effective  Date,  neither  the
      Company nor any  Subsidiary  shall issue  shares of Common Stock or Common
      Stock Equivalents;  provided, however, the 90 day period set forth in this
      Section  4.13 shall be extended for the number of Trading Days during such
      period  in which (i)  trading  in the  Common  Stock is  suspended  by any
      Trading  Market,  or (ii) following the Effective  Date, the  Registration
      Statement is not effective or the prospectus  included in the Registration
      Statement  may  not be  used  by the  Purchasers  for  the  resale  of the
      Underlying Shares.

            (b) From the date hereof until such time as no  Purchaser  holds any
      of the Securities,  the Company shall be prohibited from  consummating any
      Subsequent  Financing  involving a "Variable Rate  Transaction".  The term
      "Variable Rate Transaction"  shall mean a transaction in which the Company
      issues  or sells (i) any debt or equity  securities  that are  convertible
      into,  exchangeable  or  exercisable  for, or include the right to receive
      additional shares of Common Stock either (A) at a conversion,  exercise or
      exchange  rate or other  price that is based upon  and/or  varies with the
      trading prices of or quotations for the shares of Common Stock at any time
      after the initial issuance of such debt or equity securities, or (B) other
      than with  respect  to  customary  "weighted-average,"  "full-ratchet"  or
      similar anti-dilution provisions, with a conversion,  exercise or exchange
      price that is subject to being reset at some future date after the initial
      issuance  of such  debt or  equity  security  or upon  the  occurrence  of
      specified  or  contingent  events  directly or  indirectly  related to the
      business of the Company or the market for the Common  Stock or (ii) enters
      into any  agreement,  including,  but not  limited  to, an equity  line of
      credit,  whereby the Company may sell  securities  at a future  determined
      price.

            (c)  Unless  Shareholder  Approval  has  been  obtained  and  deemed
      effective,  the Company  shall not make any issuance  whatsoever of Common
      Stock or Common  Stock  Equivalents  at a price  below  $2.50  (subject to
      adjustment for forward and reverse stock splits, recapitalizations and the
      like). Any Purchaser shall be entitled to obtain injunctive relief against
      the  Company to  preclude  any such  issuance,  which  remedy  shall be in
      addition to any right to collect damages.

            (d) Notwithstanding the foregoing, this Section 4.13 shall not apply
      in respect of an Exempt Issuance, except that no Variable Rate Transaction
      shall be an Exempt Issuance.

      4.14 Equal Treatment of Purchasers.  No consideration  shall be offered or
paid to any  person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also offered to all of the parties to the Transaction  Documents.  Further,  the
Company shall not make any payment of principal or interest on the Debentures in
amounts  which  are   disproportionate  to  the  respective   principal  amounts
outstanding  on  the  Debentures  at  any  applicable  time.  For  clarification
purposes,  this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser,  and is intended for
the  Company  to treat  the  Purchasers  as a class  and shall not in any way be
construed as the Purchasers  acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.


                                       28
<PAGE>

      4.15 Short Sales and Confidentiality After The Date Hereof. Each Purchaser
severally and not jointly with the other  Purchasers  covenants  that neither it
nor any affiliates acting on its behalf or pursuant to any understanding with it
has  heretofore  or will  execute  any Short Sales  during the period  after the
Discussion  Time and ending at the time that the  transactions  contemplated  by
this  Agreement are first  publicly  announced as described in Section 4.6. Each
Purchaser,  severally and not jointly with the other Purchasers,  covenants that
until such time as the transactions  contemplated by this Agreement are publicly
disclosed  by the  Company as  described  in Section  4.6,  such  Purchaser  has
heretofore and will maintain,  the confidentiality of all disclosures made to it
in connection with this  transaction  (including the existence and terms of this
transaction).  Each Purchaser  understands and  acknowledges,  severally and not
jointly  with any  other  Purchaser,  that the  Commission  currently  takes the
position that coverage of short sales of shares of the Common Stock "against the
box"  prior  to the  Effective  Date  of the  Registration  Statement  with  the
Securities  is a violation of Section 5 of the  Securities  Act, as set forth in
Item  65,  Section  5 under  Section  A, of the  Manual  of  Publicly  Available
Telephone  Interpretations,  dated  July 1997,  compiled  by the Office of Chief
Counsel,  Division of Corporation  Finance.  Notwithstanding  the foregoing,  no
Purchaser makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the  securities  of the Company after the time that the
transactions  contemplated  by this  Agreement are first  publicly  announced as
described  in  Section  4.6.  Notwithstanding  the  foregoing,  in the case of a
Purchaser that is a multi-managed  investment vehicle whereby separate portfolio
managers manage separate  portions of such Purchaser's  assets and the portfolio
managers  have no  direct  knowledge  of the  investment  decisions  made by the
portfolio  managers  managing other  portions of such  Purchaser's  assets,  the
covenant  set forth above shall only apply with respect to the portion of assets
managed by the portfolio  manager that made the investment  decision to purchase
the Securities covered by this Agreement.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 Termination.  This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers,  by written notice
to the other  parties,  if the  Closing  has not been  consummated  on or before
October 21, 2005;  provided,  however,  that no such termination will affect the
right of any party to sue for any breach by the other party (or  parties).  This
Agreement  may be  terminated  by the  Company,  by written  notice to the other
parties,  if the  Closing  conditions  set  forth  in  Section  2.3  (a) are not
satisfied  on  or  before  October  21,  2005;  provided,   however,  that  such
termination  will not affect  the right of the  Company to sue for any breach by
any Purchaser hereunder.

      5.2 Fees and Expenses.  Except as expressly  set forth in the  Transaction
Documents  to the  contrary,  each party shall pay the fees and  expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party  incident  to the  negotiation,  preparation,  execution,
delivery and performance of this  Agreement.  The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities.


                                       29
<PAGE>

      5.3  Entire  Agreement.  The  Transaction  Documents,  together  with  the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.4 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.
nationally  recognized overnight courier service, or (d) if delivered other than
by facsimile or such courier  service,  upon actual receipt by the party to whom
such  notice  is  required  to be  given.  The  address  for  such  notices  and
communications shall be as set forth on the signature pages attached hereto.

      5.5 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and Purchasers who purchased at least, in the aggregate,  66% of the
Subscription  Amounts  or, in the case of a waiver,  by the party  against  whom
enforcement of any such waiver is sought.  No waiver of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent  default or a
waiver of any other provision,  condition or requirement  hereof,  nor shall any
delay or omission of either party to exercise any right  hereunder in any manner
impair the exercise of any such right.

      5.6  Headings.  The  headings  herein  are for  convenience  only,  do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. 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.

      5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities,  provided such transferee agrees
in  writing to be bound,  with  respect to the  transferred  Securities,  by the
provisions hereof that apply to the "Purchasers".


                                       30
<PAGE>

      5.8 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.10.

      5.9 Governing Law. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby irrevocably waives
personal  service of process and  consents to process  being  served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or  overnight  delivery  (with  evidence of  delivery) to such party at the
address in effect for  notices to it under this  Agreement  and agrees that such
service  shall  constitute  good and  sufficient  service of process  and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any manner  permitted by law. The parties  hereby waive all
rights  to a trial  by jury.  If  either  party  shall  commence  an  action  or
proceeding to enforce any  provisions  of the  Transaction  Documents,  then the
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its  attorneys'  fees and other costs and expenses  incurred  with the
investigation, preparation and prosecution of such action or proceeding.

      5.10 Survival.  The representations and warranties  contained herein shall
survive  the  Closing  and  the  delivery,  exercise  and/or  conversion  of the
Securities, as applicable for the applicable statue of limitations.

      5.11   Execution.   This   Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together 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,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

      5.12  Severability.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.


                                       31
<PAGE>

      5.13  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its obligations with respect to such exercise within the periods therein
provided,  then such Purchaser may rescind or withdraw,  in its sole  discretion
from  time  to time  prior  to the  Company's  performance  of such  obligations
(whether or not timely) upon written notice to the Company, any relevant notice,
demand or election in whole or in part without  prejudice to its future  actions
and rights.

      5.14   Replacement  of  Securities.   If  any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if  requested  and,  in the  case of  mutilation,  delivery  of such
certificate or instrument to the Company.  The applicants for a new  certificate
or instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.

      5.15  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      5.16 Payment Set Aside.  To the extent that the Company makes a payment or
payments to any Purchaser  pursuant to any  Transaction  Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.


                                       32
<PAGE>

      5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner  whatsoever  claim, and will resist
any and all efforts to be compelled  to take the benefit or advantage  of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document.  Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed  and  provided  that  the  total  liability  of  the  Company  under  the
Transaction  Documents  for payments in the nature of interest  shall not exceed
the maximum lawful rate authorized  under  applicable law (the "Maximum  Rate"),
and, without  limiting the foregoing,  in no event shall any rate of interest or
default  interest,  or both of them,  when aggregated with any other sums in the
nature  of  interest  that  the  Company  may  be  obligated  to pay  under  the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract  rate of  interest  allowed by law and  applicable  to the  Transaction
Documents is  increased  or  decreased  by statute or any official  governmental
action subsequent to the date hereof,  the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction  Documents
from the  effective  date  forward,  unless such  application  is  precluded  by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum  Rate  is  paid  by  the  Company  to  any  Purchaser  with  respect  to
indebtedness  evidenced  by the  Transaction  Documents,  such  excess  shall be
applied  by  such  Purchaser  to  the  unpaid  principal  balance  of  any  such
indebtedness  or be refunded to the Company,  the manner of handling such excess
to be at such Purchaser's election.

      5.18  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  Nothing  contained  herein or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant  thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Documents. Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without  limitation the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the Purchasers but only HPC Capital,  the placement  agent for the  transaction.
The  Company  has  elected to  provide  all  Purchasers  with the same terms and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.

      5.19  Liquidated  Damages.  The Company's  obligations  to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.


                                       33
<PAGE>

      5.20  Construction.  The  parties  agree  that each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            (Signature Pages Follow)


                                       34
<PAGE>

      IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

ONETRAVEL HOLDINGS, INC.                         Address for Notice:

By: /s/ Marc E. Bercoon                          5775 Peachtree Dunwoody Road
    --------------------------                   Building G, Suite 300
    Name:  Marc E. Bercoon                       Atlanta, GA 30346
    Title:  President                            Attn: President
                                                 Fax #: (404) 943-1094

With a copy to (which shall not constitute notice):

Katten Muchin Rosenman
525 West Monroe Street
Chicago, Illinois 60661-3693
Attn: Matthew S. Brown
Fax #: (312) 902-1061

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]


                                       35
<PAGE>

        [PURCHASER SIGNATURE PAGES TO OTV SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Purchaser: ________________________________________________________
Signature of Authorized Signatory of Purchaser: ________________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Email Address of Purchaser:________________________________________________

Address for Notice of Purchaser:




Address for Delivery of Securities for Purchaser (if not same as above):





Subscription Amount:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]


                                       36
<PAGE>

                              DISCLOSURE SCHEDULES

                                       TO

                          SECURITIES PURCHASE AGREEMENT

                                  by and among

                            ONETRAVEL HOLDINGS, INC.

                                       and

                                 THE PURCHASERS

                             dated October 21, 2005


                                       37
<PAGE>

Pursuant to that certain Securities Purchase Agreement (the "Agreement"),  dated
as of October  21,  2005,  by and among  OneTravel  Holdings,  Inc.,  a Delaware
corporation  (the  "Company"),  and the  purchasers  identified on the signature
pages  thereto,  the  Company  provides  the  following  Disclosure   Schedules.
Capitalized  terms used herein and not otherwise defined shall have the meanings
set forth in the Agreement.  Section references are to sections in the Agreement
pursuant to which the information is being disclosed.

The  inclusion of any item in the  Disclosure  Schedules  does not  constitute a
representation by the Company that such items are material to the Company nor is
such inclusion an admission of liability to any party.

In accordance  with the Agreement,  the Company hereby  provides the information
hereinafter set forth.


                                       38
<PAGE>

                                 Schedule 3.1(a)

1. Company subsidiaries and Company equity ownership thereof:

Entity                          State of Incorporation     Ownership Percentage
------                          ----------------------     --------------------

Active Subsidiaries:
--------------------
Farequest Holdings, Inc.        Delaware                   100
OneTravel, Inc.                 Texas                      100

Inactive Subsidiaries:
----------------------
FS SunTours, Inc.               Delaware                   100
DM Marketing, Inc.              Delaware                   100
Avenel Ventures, Inc.           Nevada                     100
eStorefronts.net Corp.          New York                   less than 100
Premiere Shoe Group, LLC        New York                   75
11thHourVacations.com           South Carolina             100
Flightserv, Inc.                Delaware                   100
FS Tours, Inc.                  Delaware                   100
Logisoft                        Delaware                   100
PDK Properties, Inc.            Georgia                    100
Internet Aviation Services
  Limited, Ltd.                 Nevada                     100
Gateway Development Corp.       New York                   100
Capital First Holdings, Inc.
  of Georgia                    Georgia                    100

2.    The capital  stock of each  Subsidiary  owned by the Company is subject to
      the following Liens:

      a.    Liens in favor of the  holders of the Seller  Notes under the Seller
            Note Documents;

      b.    Liens in favor of the Agent (as defined in the  Security  Agreement)
            for the benefit of the Purchasers; and

      c.    Permitted Liens.


                                       39
<PAGE>

                                 Schedule 3.1(g)

1.    Capitalization of the Company is as follows:

Common Stock ($.04 par value):  50,000,000 shares authorized;  10,753,432 shares
outstanding as of October 14, 2005; 13,121 treasury shares.

Preferred Stock ($.01 par value):  10,000,000 shares  authorized;  669.50 shares
outstanding as of October 19, 2005.

2.    Outstanding Common Stock Equivalents of the Company are as follows:

      a.    1,057,554 shares of common stock underlying warrants  exercisable at
            $5.50 per share issued in February 2005;

      b.    1,818,181 shares of common stock underlying the Seller Notes;

      c.    2,262,548 shares of common stock underlying warrants  exercisable at
            $5.50 per share issued in April 2005;

      d.    339,382 shares of common stock  underlying  warrants  exercisable at
            $6.05 per share issued in April 2005;

      e.    285,454 shares of common stock issuable upon  conversion of series A
            preferred stock;

      f.    1,194,287 shares of common stock  underlying  warrants other than as
            listed above  exercisable at a weighted  average price of $27.80 per
            share;

      g.    options  for  185,255  shares  of  common  stock  issued  under  the
            Company's stock option plans;

      h.    additional  shares of common stock are also  issuable in  connection
            with the Farequest acquisition upon conversion of outstanding series
            A preferred stock; and

      i.    up to 2,000,000 shares of common stock are unissued but reserved for
            issuance under the Company's stock option plans.

3.    The  issuance  and sale of the  Securities  may trigger the  anti-dilution
      rights of certain of the Company's warrantholders, other than the warrants
      issued in February 2005 and April 2005 described in 3.1(g)(2) above.

4.    Shareholder  Approval will be required for the issuance of the  Underlying
      Shares at a price less than the original  Conversion Price, in the case of
      the Debentures, or the initial Exercise Price, in the case of the Warrant.


                                       40
<PAGE>

                                 Schedule 3.1(h)

1.    The Company  failed to file its Annual  Report on Form 10-K for the fiscal
      year ended  June 30,  2005 on a timely  basis,  and on  October  19,  2005
      received a notice of failure to satisfy  continued  listing standards from
      the American Stock Exchange with respect thereto.

2.    The Company failed to file Current Reports on Form 8-K on a timely basis.

3.    The carrying  value of the Company's  warrant  obligation set forth in the
      Company's  Amendment  No. 2 to Annual  Report on Form 10-K for the  fiscal
      year ended June 30, 2004 may be required to be restated.


                                       41
<PAGE>

                                 Schedule 3.1(i)

(i)   1.    The  Company  failed to file its Annual  Report on Form 10-K for the
            fiscal  year ended June 30, 2005 on a timely  basis,  and on October
            19, 2005 received a notice of failure to satisfy  continued  listing
            standards from the American Stock Exchange with respect thereto.

      2.    The carrying value of the Company's warrant  obligation set forth in
            the Company's  Amendment No. 2 to Annual Report on Form 10-K for the
            fiscal year ended June 30, 2004 may be required to be restated.

(ii)  1.    The Company entered into a loan agreement with its chairman, William
            A. Goldstein, for an unsecured loan of up to $1,000,000 in September
            2005.

(iii) 1.    The carrying value of the Company's warrant  obligation set forth in
            the Company's  Amendment No. 2 to Annual Report on Form 10-K for the
            fiscal year ended June 30, 2004 may be required to be restated.


                                       42
<PAGE>

                                 Schedule 3.1(j)

1.    The Company  failed to file its Annual  Report on Form 10-K for the fiscal
      year ended  June 30,  2005 on a timely  basis,  and on  October  19,  2005
      received a notice of failure to satisfy  continued  listing standards from
      the American Stock Exchange with respect thereto.


                                       43
<PAGE>

                                 Schedule 3.1(l)

1.    The Company  failed to file its Annual  Report on Form 10-K for the fiscal
      year ended  June 30,  2005 on a timely  basis,  and on  October  19,  2005
      received a notice of failure to satisfy  continued  listing standards from
      the American Stock Exchange with respect thereto.

2.    The Company failed to file Current Reports on Form 8-K on a timely basis.

3.    FS  SunTours,  Inc.  is in  default  under  or in  material  violation  of
      substantially all of the material agreements to which its is a party or by
      which any of its  properties  are bound,  and it has  received  notices of
      claims with respect thereto.


                                       44
<PAGE>

                                 Schedule 3.1(m)

1.    The Company  failed to file its Annual  Report on Form 10-K for the fiscal
      year ended  June 30,  2005 on a timely  basis,  and on  October  19,  2005
      received a notice of failure to satisfy  continued  listing standards from
      the American Stock Exchange with respect thereto.


                                       45
<PAGE>

                                 Schedule 3.1(n)

1.    Liens in connection with the Seller Notes;

2.    Liens in  connection  with the  Farequest  Note,  in the case of Farequest
      Holdings, Inc.; and

3.    Permitted Liens.


                                       46
<PAGE>

                                 Schedule 3.1(p)

1.    The Company's  directors and officers  insurance coverage may be less than
      the aggregate Subscription Amount.


                                       47
<PAGE>

                                 Schedule 3.1(q)

1.    The Company  entered into a loan agreement  with its chairman,  William A.
      Goldstein, for an unsecured loan of up to $1,000,000 in September 2005.


                                       48
<PAGE>

                                 Schedule 3.1(s)

1.    Broker's  or Finder's  fees or  commissions  are payable  under the Escrow
      Agreement.


                                       49
<PAGE>

                                 Schedule 3.1(t)

1.    Shareholder  Approval will be required for the issuance of the  Underlying
      Shares at a price less than the original  Conversion Price, in the case of
      the Debentures, or the initial Exercise Price, in the case of the Warrant.


                                       50
<PAGE>

                                 Schedule 3.1(w)

1.    The Company  failed to file its Annual  Report on Form 10-K for the fiscal
      year ended  June 30,  2005 on a timely  basis,  and on  October  19,  2005
      received a notice of failure to satisfy  continued  listing standards from
      the American Stock Exchange with respect thereto.

2.    The  Company  may not be,  and may not in the  foreseeable  future  be, in
      compliance with listing and maintenance requirements of the Trading Market
      with respect to net worth requirements.


                                       51
<PAGE>

                                 Schedule 3.1(v)

1.    Each  of the  securityholders  described  as  selling  securityholders  or
      selling stockholders in the following registration  statements on Form S-3
      filed by the  Company  with the  Commission  have the  right to cause  the
      Company  to  effect  the  registration  under  the  Securities  Act of the
      securities of the Company described in such registration statement:

      a.    Registration No. 333-124931;

      b.    Registration No. 333-120047;

      c.    Registration No. 333-111526;

      d.    Registration No. 333-57178; and

      e.    the registration statement on Form S-3 filed by the Company on March
            16, 2001.


                                       52
<PAGE>

                                 Schedule 3.1(y)

1.    The Company delivered a draft of its Annual Report on Form 10-K to certain
      of he  Purchasers or their agents or counsel  which  contains  information
      which constitutes or might constitute material, nonpublic information.

2.    The information  set forth in these  Disclosure  Schedules  constitutes or
      might constitute material, nonpublic information.


                                       53
<PAGE>

                                Schedule 3.1(aa)

1.    The obligations, indebtedness and liens pursuant to the Seller Notes;

2.    The obligations, indebtedness and liens pursuant to the Farequest Note, in
      the case of Farequest Holdings, Inc.;

3.    The Company  entered into a loan agreement  with its chairman,  William A.
      Goldstein, for an unsecured loan of up to $1,000,000 in September 2005.

4.    FS SunTours,  Inc. is in default with respect to substantially  all of its
      Indebtedness.

5.    See attached Indebtedness Schedule.


                                       54
<PAGE>

OneTravel Holdings, Inc.
Indebtedness
October 20, 2005

<TABLE>
<CAPTION>
 Entity                               Description
 ------                               -----------
<S>                                   <C>                                                          <C>
 Onetravel Holdings, Inc.             Amadeus & Terra - Onetravel.com purchase note                $    13,026,860
 Onetravel Holdings, Inc.             Goldstein note                                                     1,000,000
 Onetravel Holdings, Inc.             Goldfarb                                                             105,000
 FS Suntours, Inc. (d/b/a Suntrips)   MyTravel Canada services agreement note                            7,122,917(a)
 FS Suntours, Inc. (d/b/a Suntrips)   MyTravel Canada purchase note                                      1,000,000(a)
 FS Suntours, Inc. (d/b/a Suntrips)   Capital Lease                                                         60,347
 Farequest Holdings, Inc.             Auto loans                                                           350,743
 Farequest Holdings, Inc.             CS Holdings note                                                   1,000,000
 Onetravel.com, Inc.                  Capital Lease                                                          6,930
                                                                                                   ---------------

                                                                                                   $    23,672,796
                                                                                                   ===============

                                      Note 1:
                                      -------

                                   (a)The MyTravel  Canada notes are recorded on
                                      the  financial  statements  net of imputed
                                      interest.  The  discounts on the notes are
                                      as follows as of the measurement date.

                                      Discount on MyTravel Canada services agreement note               (1,660,566)
                                      Discount on MyTravel Canada sale note                               (399,341)

                                      Note 2:
                                      -------

                                      Onetravel Holdings, Inc. and/or its subsidiaries have issued Letters of
                                      Credit to certain service providers in the ordinary course of business.
                                      All LOC's are fully collateralized by deposits held by OneTravel
                                      Holdings, Inc. or its subsidiaries.  The LOC's currently issued are:

                                      MyTravel Canada                                              $       500,000
                                      Ryan Airlines                                                        750,000
                                      Airline Reporting Corporation                                        140,000
                                      Delta Airlines                                                        65,000
                                      Scott & Associates (Office Building Lease)                           250,000
</TABLE>


                                       55
<PAGE>

                                Schedule 3.1(ee)

1.    BDO Seidman, LLP are the Company's accountants.


                                       56
<PAGE>

                                Schedule 3.1(ff)

1.    Obligations   and  liabilities  of  the  Company  under  the  Seller  Note
      Documents.

2.    Obligations  and  liabilities  of  Farequest  Holdings,   Inc.  under  the
      Farequest Note Documents.


                                       57
<PAGE>

                                Schedule 3.1(jj)

1.    The  satisfaction of placement  agent's fees by the payment of cash and/or
      the issuance of securities  thereto in connection with sales of securities
      by the Company described in the SEC Reports.


                                       58
<PAGE>

                                  Schedule 4.9

The Company  currently expects to use the proceeds from the issuance and sale of
the Debentures as follows:

1.    $3,000,000  budgeted for  financing  obligations  in  connection  with the
      contemplated FS SunTours, Inc. d/b/a Sun Trips sale.

2.    $2,500,000 budgeted for collateral needs for merchant account.

3.    Approximately  $1,000,000  for  repayment  of interim  loans  provided  by
      William Goldstein,  the Chairman & CEO of the Company, pending the closing
      of the  financing;  no  interest  will  be paid or  accrued  and no  other
      consideration for the loans will be made.

4.    $500,000  budgeted for interest on the Seller Notes;  this amount  assumes
      the Seller Notes are not repaid prior to March 15, 2006.

5.    $1,000,000 budgeted for technology enhancements.

6.    Approximately $1,215,000 budgeted for interest payments on Debentures.

7.    The balance for general working capital purposes.


                                       59
<PAGE>