Document:

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.

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<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:

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<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>REGISTRATION RIGHTS AGREEMENT

      This Registration  Rights Agreement (this "Agreement") is made and entered
into as of  October  21,  2005,  among  OneTravel  Holdings,  Inc.,  a  Delaware
corporation  (the  "Company"),  and the purchasers  signatory  hereto (each such
purchaser is a "Purchaser" and collectively, the "Purchasers").

      This  Agreement is made  pursuant to the  Securities  Purchase  Agreement,
dated as of the date hereof among the Company and the Purchasers  (the "Purchase
Agreement").

      The Company and the Purchasers hereby agree as follows:

      1. Definitions

      Capitalized  terms used and not otherwise  defined herein that are defined
in the  Purchase  Agreement  shall  have the  meanings  given  such terms in the
Purchase  Agreement.  As used in this agreement,  the following terms shall have
the following meanings:

            "Advice" shall have the meaning set forth in Section 6(d).

            "Effectiveness Date" means, with respect to the initial Registration
      Statement required to be filed hereunder, the 120th calendar day following
      the  date  hereof  and,  with  respect  to  any  additional   Registration
      Statements  which may be  required  pursuant  to  Section  3(c),  the 60th
      calendar  day  following  the date on which the Company  first  knows,  or
      reasonably should have known, that such additional  Registration Statement
      is  required  hereunder;  provided,  however,  in the event the Company is
      notified by the Commission that one of the above  Registration  Statements
      will not be  reviewed  or is no  longer  subject  to  further  review  and
      comments,  the Effectiveness Date as to such Registration  Statement shall
      be the fifth  Trading  Day  following  the date on which the Company is so
      notified if such date precedes the dates required above.

            "Effectiveness  Period"  shall have the meaning set forth in Section
      2(a).

            "Event" shall have the meaning set forth in Section 2(b).

            "Event Date" shall have the meaning set forth in Section 2(b).

            "Filing  Date"  means,  with  respect  to the  initial  Registration
      Statement  required  hereunder,  the 60th  calendar day following the date
      hereof and, with respect to any additional  Registration  Statements which
      may be required  pursuant to Section 3(c), the 30th day following the date
      on which the Company  first knows,  or  reasonably  should have known that
      such additional Registration Statement is required hereunder.

                                       1
<PAGE>

            "Holder" or "Holders"  means the holder or holders,  as the case may
      be, from time to time of Registrable Securities.

            "Indemnified  Party"  shall  have the  meaning  set forth in Section
      5(c).

            "Indemnifying  Party"  shall have the  meaning  set forth in Section
      5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "Plan of  Distribution"  shall have the meaning set forth in Section
      2(a).

            "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.

            "Prospectus"  means  the  prospectus   included  in  a  Registration
      Statement (including,  without limitation,  a prospectus that includes any
      information  previously  omitted  from a  prospectus  filed  as part of an
      effective  registration  statement in reliance upon Rule 430A  promulgated
      under the Securities  Act), as amended or  supplemented  by any prospectus
      supplement,  with  respect to the terms of the  offering of any portion of
      the Registrable  Securities covered by a Registration  Statement,  and all
      other   amendments   and   supplements   to  the   Prospectus,   including
      post-effective  amendments,  and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable Securities" means (i) all of the shares of Common Stock
      issuable  upon  conversion  in full of the  Debentures,  (ii)  all  shares
      issuable as interest on the Debentures  assuming all permissible  interest
      payments  are made in shares of Common Stock and the  Debentures  are held
      until maturity,  (iii) all Warrant Shares,  (iv) any securities  issued or
      issuable   upon  any  stock   split,   dividend  or  other   distribution,
      recapitalization  or similar  event with respect to the  foregoing and (v)
      any  additional  shares  issuable  in  connection  with any  anti-dilution
      provisions in the Debentures or the Warrants (in each case, without giving
      effect to any  limitations  on  conversion  set forth in the  Debenture or
      limitations on exercise set forth in the Warrant).

            "Registration  Statement" means the registration statements required
      to  be  filed  hereunder  and  any  additional   registration   statements
      contemplated  by Section 3(c),  including  (in each case) the  Prospectus,
      amendments and supplements to such  registration  statement or Prospectus,
      including pre- and post-effective  amendments,  all exhibits thereto,  and
      all material  incorporated  by reference or deemed to be  incorporated  by
      reference in such registration statement.

            "Rule 415" means Rule 415 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 purpose and effect as such Rule.

                                       2
<PAGE>

            "Rule 424" means Rule 424 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 purpose and effect as such Rule.

            "Selling Shareholder Questionnaire" shall have the meaning set forth
      in Section 3(a).

      2. Shelf Registration

      (a)  On  or  prior  to  each  Filing  Date,  the  Company  shall  use  its
commercially  best  efforts to prepare  and file with the  Commission  a "Shelf"
Registration Statement covering the resale of 130% of the Registrable Securities
on such Filing Date for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration  Statement shall be on Form S-1 unless the Company is
then eligible to register for resale the Registrable  Securities on Form S-3, in
which case such registration shall be on such Form S-3 or on another appropriate
form in accordance herewith (the Purchasers  acknowledge that the Company is not
currently  eligible  to use Form S-3 to  register  for  resale  the  Registrable
Securities), and shall contain (except if otherwise required pursuant to written
comments  received  from  the  Commission  upon a  review  of  the  Registration
Statement)  substantially the "Plan of Distribution" attached hereto as Annex A.
Subject to the terms of this Agreement,  the Company shall use its  commercially
best efforts to cause a Registration  Statement to be declared  effective  under
the Securities Act as promptly as possible after the filing thereof,  but in any
event prior to the applicable Effectiveness Date, and shall use its commercially
best efforts to keep such Registration  Statement  continuously  effective under
the Securities Act until all Registrable Securities covered by such Registration
Statement have been sold or may be sold without volume restrictions  pursuant to
Rule 144(k) as  determined  by the counsel to the Company  pursuant to a written
opinion  letter  to such  effect,  addressed  and  acceptable  to the  Company's
transfer  agent and the  affected  Holders  (the  "Effectiveness  Period").  The
Company shall telephonically  request effectiveness of a Registration  Statement
as of 5:00 pm Eastern  Time on a Trading  Day.  The  Company  shall  immediately
notify  the  Holders  via  facsimile  of  the  effectiveness  of a  Registration
Statement  on the same  Trading  Day that the  Company  telephonically  confirms
effectiveness  with  the  Commission,  which  shall be the  date  requested  for
effectiveness of a Registration Statement. The Company shall, by 9:30 am Eastern
Time on the Trading  Day after the  Effective  Date (as defined in the  Purchase
Agreement), file a Form 424(b)(5) with the Commission.  Failure to so notify the
Holder within 1 Trading Day of such notification  shall be deemed an Event under
Section 2(b).

                                       3
<PAGE>

      (b) If:  (i) a  Registration  Statement  is not  filed  on or prior to its
Filing Date (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by Section
3(a),  the Company  shall not be deemed to have  satisfied  this clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration in
accordance  with Rule 461  promulgated  under the  Securities  Act,  within five
Trading  Days of the date that the  Company is  notified  (orally or in writing,
whichever is earlier) by the Commission  that a Registration  Statement will not
be  "reviewed,"  or not  subject  to  further  review,  or  (iii)  prior  to its
Effectiveness  Date,  the Company  fails to file a  pre-effective  amendment and
otherwise  respond in writing to comments  made by the  Commission in respect of
such  Registration  Statement  within 20  calendar  days  after the  receipt  of
comments by or notice from the  Commission  that such  amendment  is required in
order  for a  Registration  Statement  to  be  declared  effective,  or  (iv)  a
Registration  Statement  filed or required to be filed hereunder is not declared
effective  by the  Commission  by its  Effectiveness  Date,  or  (v)  after  the
Effectiveness  Date, a  Registration  Statement  ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required
to be  effective,  or the Holders are not  permitted  to utilize the  Prospectus
therein to resell such Registrable  Securities for 20 consecutive  calendar days
but no more than an  aggregate of 30 calendar  days during any  12-month  period
(which need not be  consecutive  Trading Days) (any such failure or breach being
referred  to as an "Event",  and for  purposes of clause (i) or (iv) the date on
which such Event  occurs,  or for purposes of clause (ii) the date on which such
five  Trading Day period is  exceeded,  or for purposes of clause (iii) the date
which such 20 calendar day period is exceeded, or for purposes of clause (v) the
date on which such 20 or 30 calendar  day  period,  as  applicable,  is exceeded
being  referred to as "Event  Date"),  then in addition to any other  rights the
Holders may have hereunder or under  applicable law, on each such Event Date and
on each monthly  anniversary  of each such Event Date (if the  applicable  Event
shall not have been cured by such date) until the applicable Event is cured, the
Company  shall  pay to each  Holder an amount  in cash,  as  partial  liquidated
damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid
by such Holder pursuant to the Purchase Agreement for any Registrable Securities
other than Warrant  Shares then held by such Holder  (assuming  for such purpose
only,  that all  Debentures  have been  converted).  The parties  agree that the
Company will not be liable for liquidated  damages under this Section in respect
of the  Warrants.  If the Company  fails to pay any partial  liquidated  damages
pursuant to this Section in full within seven days after the date  payable,  the
Company  will pay  interest  thereon at a rate of 18% per annum (or such  lesser
maximum  amount that is permitted to be paid by  applicable  law) to the Holder,
accruing daily from the date such partial  liquidated damages are due until such
amounts,  plus  all  such  interest  thereon,  are  paid in  full.  The  partial
liquidated  damages pursuant to the terms hereof shall apply on a daily pro-rata
basis for any portion of a month prior to the cure of an Event.

      3. Registration Procedures.

      In connection with the Company's registration  obligations hereunder,  the
Company shall:

                                        4
<PAGE>

      (a)  Not  less  than  five  Trading  Days  prior  to the  filing  of  each
Registration  Statement or any related Prospectus or any amendment or supplement
thereto  (including  any  document  that would be  incorporated  or deemed to be
incorporated  therein by  reference),  the  Company  shall,  (i) furnish to each
Holder copies of all such documents proposed to be filed, which documents (other
than those  incorporated  or deemed to be  incorporated  by  reference)  will be
subject  to the  review  of such  Holders,  and  (ii)  cause  its  officers  and
directors,  counsel and independent  certified public  accountants to respond to
such inquiries as shall be necessary,  in the  reasonable  opinion of respective
counsel  to  conduct  a  reasonable  investigation  within  the  meaning  of the
Securities Act. The Company shall not file a Registration  Statement or any such
Prospectus or any  amendments or  supplements  thereto to which the Holders of a
majority of the Registrable  Securities shall  reasonably  object in good faith,
provided  that,  the Company is notified of such  objection  in writing no later
than 5 Trading  Days after the  Holders  have been so  furnished  copies of such
documents.   Each   Holder   agrees  to  furnish  to  the  Company  a  completed
Questionnaire  in the form  attached  to this  Agreement  as Annex B (a "Selling
Shareholder  Questionnaire")  not less than two Trading Days prior to the Filing
Date or by the end of the fourth  Trading Day  following  the date on which such
Holder receives draft materials in accordance with this Section.

      (b) (i) Prepare and file with the Commission  such  amendments,  including
post-effective  amendments,  to a Registration Statement and the Prospectus used
in  connection  therewith as may be necessary to keep a  Registration  Statement
continuously  effective  as to the  applicable  Registrable  Securities  for the
Effectiveness Period subject to Section 2(b)(iv),  and prepare and file with the
Commission  such  additional  Registration  Statements  in order to register for
resale under the Securities Act all of the  Registrable  Securities;  (ii) cause
the related Prospectus to be amended or supplemented by any required  Prospectus
supplement  (subject to the terms of this Agreement),  and as so supplemented or
amended  to be  filed  pursuant  to Rule  424;  (iii)  respond  as  promptly  as
reasonably possible to any comments received from the Commission with respect to
a Registration  Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to a Registration  Statement;  and (iv) comply in
all material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable  Securities  covered by a
Registration  Statement during the applicable  period in accordance  (subject to
the terms of this  Agreement)  with the intended  methods of  disposition by the
Holders  thereof set forth in such  Registration  Statement  as so amended or in
such Prospectus as so supplemented.

      (c)  If  during  the  Effectiveness  Period,  the  number  of  Registrable
Securities  at any time exceeds 90% of the number of shares of Common Stock then
registered in a Registration  Statement,  then the Company shall file as soon as
reasonably  practicable but in any case prior to the applicable  Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than 130% of the number of such Registrable Securities.

                                       5
<PAGE>

      (d) Notify the Holders of Registrable  Securities to be sold (which notice
shall,  pursuant to clauses  (ii)  through (vi)  hereof,  be  accompanied  by an
instruction  to suspend the use of the  Prospectus  until the requisite  changes
have been made) as promptly as reasonably  possible  (and, in the case of (i)(A)
below,  not less than five Trading Days prior to such filing) and (if  requested
by any such Person) confirm such notice in writing no later than one Trading Day
following  the day (i)(A) when a  Prospectus  or any  Prospectus  supplement  or
post-effective  amendment to a  Registration  Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration  Statement and whenever the Commission  comments in writing on
such Registration  Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders);  and (C) with
respect to a Registration  Statement or any post-effective  amendment,  when the
same has become  effective;  (ii) of any request by the  Commission or any other
Federal or state  governmental  authority  for  amendments or  supplements  to a
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission or any other federal or state governmental  authority
of any stop order  suspending  the  effectiveness  of a  Registration  Statement
covering  any or all of the  Registrable  Securities  or the  initiation  of any
Proceedings  for  that  purpose;  (iv)  of the  receipt  by the  Company  of any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction,  or the  initiation  or  threatening  of any  Proceeding  for such
purpose;  (v) of the  occurrence  of any event or passage of time that makes the
financial  statements  included  in  a  Registration  Statement  ineligible  for
inclusion  therein  or  any  statement  made  in  a  Registration  Statement  or
Prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any material  respect or that  requires any  revisions to a
Registration Statement,  Prospectus or other documents so that, in the case of a
Registration  Statement  or the  Prospectus,  as the  case  may be,  it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in light of the  circumstances  under which they were made, not misleading;  and
(vi) the  occurrence  or existence  of any pending  corporate  development  with
respect to the Company that the Company  believes  may be material and that,  in
the  determination  of the  Company,  makes it not in the best  interest  of the
Company  to  allow  continued   availability  of  a  Registration  Statement  or
Prospectus;  provided  that  any  and  all  of  such  information  shall  remain
confidential  to each Holder until such  information  otherwise  becomes public,
unless  disclosure  by  a  Holder  is  required  by  law;   provided,   further,
notwithstanding  each Holder's agreement to keep such information  confidential,
the Holders  make no  acknowledgement  that any such  information  is  material,
non-public information.

      (e) Use its  commercially  best  efforts to avoid the  issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration  Statement,  or  (ii)  any  suspension  of  the  qualification  (or
exemption from  qualification) of any of the Registrable  Securities for sale in
any jurisdiction, at the earliest practicable moment.

      (f) Furnish to each Holder, without charge, at least one conformed copy of
each such Registration Statement and each amendment thereto, including financial
statements  and  schedules,   all  documents   incorporated   or  deemed  to  be
incorporated  therein by reference to the extent  requested by such Person,  and
all exhibits to the extent requested by such Person  (including those previously
furnished  or  incorporated  by  reference)  promptly  after the  filing of such
documents with the Commission.

                                       6
<PAGE>

      (g) Promptly deliver to each Holder, without charge, as many copies of the
Prospectus  or  Prospectuses  (including  each  form  of  prospectus)  and  each
amendment  or  supplement  thereto as such  Persons  may  reasonably  request in
connection with resales by the Holder of Registrable Securities.  Subject to the
terms  of  this  Agreement,  the  Company  hereby  consents  to the  use of such
Prospectus  and each  amendment  or  supplement  thereto by each of the  selling
Holders in connection with the offering and sale of the  Registrable  Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving on any notice pursuant to Section 3(d).

      (h) If NASDR Rule 2710 requires any  broker-dealer  to make a filing prior
to  executing a sale by a Holder,  the Company  shall (i) make an Issuer  Filing
with the NASDR,  Inc.  Corporate  Financing  Department  pursuant  to NASDR Rule
2710(b)(10)(A)(i),  (ii)  respond  within  five  Trading  Days  to any  comments
received  from  NASDR in  connection  therewith,  (iii) and pay the  filing  fee
required in connection therewith.

      (i) Prior to any resale of  Registrable  Securities  by a Holder,  use its
commercially  reasonable  efforts to register or qualify or  cooperate  with the
selling  Holders  in  connection  with the  registration  or  qualification  (or
exemption from the Registration or qualification) of such Registrable Securities
for the  resale  by the  Holder  under the  securities  or Blue Sky laws of such
jurisdictions  within the United  States as any Holder  reasonably  requests  in
writing,  to keep each  registration or qualification  (or exemption  therefrom)
effective  during the  Effectiveness  Period and to do any and all other acts or
things reasonably  necessary to enable the disposition in such  jurisdictions of
the Registrable  Securities  covered by each Registration  Statement;  provided,
that the Company  shall not be required to qualify  generally  to do business in
any jurisdiction  where it is not then so qualified,  subject the Company to any
material tax in any such jurisdiction  where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

      (j) If requested by the Holders,  cooperate with the Holders to facilitate
the timely  preparation  and delivery of certificates  representing  Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which  certificates  shall be free,  to the  extent  permitted  by the  Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holders may
request.

      (k) Upon the  occurrence of any event  contemplated  by this Section 3, as
promptly as reasonably possible under the circumstances  taking into account the
Company's good faith  assessment of any adverse  consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment,  including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that,  as  thereafter  delivered,  neither  a  Registration  Statement  nor such
Prospectus will contain an untrue  statement of a material fact or omit to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  If the Company  notifies the Holders in accordance with clauses
(ii)  through  (vi) of Section  3(d) above to suspend the use of any  Prospectus
until the requisite  changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its commercially best
efforts to ensure that the use of the  Prospectus  may be resumed as promptly as
is  practicable.  The Company shall be entitled to exercise its right under this
Section  3(k) to  suspend  the  availability  of a  Registration  Statement  and
Prospectus,  subject to the payment of partial  liquidated  damages  pursuant to
Section 2(b),  for a period not to exceed 60 days (which need not be consecutive
days) in any 12 month period.

                                       7
<PAGE>

      (l)  Comply  in all  material  respects  with  all  applicable  rules  and
regulations of the Commission.

      (m) The Company may require each selling  Holder to furnish to the Company
at least two Trading  Days prior to the Filing Date a certified  statement as to
the number of shares of Common Stock  beneficially  owned by such Holder and, if
required by the  Commission,  the person thereof that has voting and dispositive
control  over the Shares.  During any periods that the Company is unable to meet
its  obligations  hereunder with respect to the  registration of the Registrable
Securities  solely because any Holder fails to furnish such  information  within
three Trading Days of the Company's  request,  any  liquidated  damages that are
accruing  at such time as to such Holder only shall be tolled and any Event that
may otherwise  occur solely  because of such delay shall be suspended as to such
Holder only, until such information is delivered to the Company.

      4.  Registration   Expenses.   All  fees  and  expenses  incident  to  the
performance  of or compliance  with this Agreement by the Company shall be borne
by the Company whether or not any Registrable  Securities are sold pursuant to a
Registration  Statement.  The fees and  expenses  referred  to in the  foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including,  without  limitation,  fees and expenses (A) with respect to filings
required  to be made with the Trading  Market on which the Common  Stock is then
listed for trading,  (B) in compliance with applicable  state securities or Blue
Sky laws  reasonably  agreed to by the  Company in writing  (including,  without
limitation, fees and disbursements of counsel for the Company in connection with
Blue  Sky  qualifications  or  exemptions  of  the  Registrable  Securities  and
determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing  that may be  required  to be made by any broker  through  which a
Holder intends to make sales of  Registrable  Securities  with NASD  Regulation,
Inc.  pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a  customary  brokerage  commission  in  connection  with such  sale,  (ii)
printing  expenses   (including,   without  limitation,   expenses  of  printing
certificates  for  Registrable  Securities and of printing  prospectuses  if the
printing of prospectuses is reasonably requested by the holders of a majority of
the  Registrable  Securities  included  in  a  Registration  Statement),   (iii)
messenger,  telephone  and delivery  expenses,  (iv) fees and  disbursements  of
counsel for the Company, (v) Securities Act liability insurance,  if the Company
so desires  such  insurance,  and (vi) fees and  expenses  of all other  Persons
retained by the Company in connection with the  consummation of the transactions
contemplated  by this Agreement.  In addition,  the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including,  without limitation,
all salaries and expenses of its  officers  and  employees  performing  legal or
accounting  duties),  the expense of any annual  audit and the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities  exchange  as  required  hereunder.  In no event shall the Company be
responsible  for any  broker or  similar  commissions  or,  except to the extent
provided for in the Transaction Documents,  any legal fees or other costs of the
Holders.

                                       8
<PAGE>

      5. Indemnification

      (a) Indemnification by the Company. The Company shall, notwithstanding any
termination  of this  Agreement,  indemnify and hold  harmless each Holder,  the
officers,  directors,  agents,  brokers  (including  brokers  who offer and sell
Registrable  Securities  as  principal as a result of a pledge or any failure to
perform under a margin call of Common Stock),  investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the  Securities  Act or Section  20 of the  Exchange  Act) and the
officers,  directors,  agents and employees of each such controlling  Person, to
the fullest  extent  permitted by  applicable  law, from and against any and all
losses,  claims,  damages,  liabilities,  costs (including,  without limitation,
reasonable attorneys' fees) and expenses (collectively,  "Losses"), as incurred,
arising  out of or  relating  to any untrue or  alleged  untrue  statement  of a
material fact contained in a Registration Statement,  any Prospectus or any form
of prospectus or in any  amendment or supplement  thereto or in any  preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein  (in the case of any  Prospectus  or form of  prospectus  or
supplement  thereto,  in light of the circumstances  under which they were made)
not  misleading,  except to the extent,  but only to the  extent,  that (i) such
untrue statements or omissions are based solely upon information  regarding such
Holder  furnished  in writing to the  Company by such Holder  expressly  for use
therein,  or to the extent that such information  relates to such Holder or such
Holder's  proposed  method of  distribution  of  Registrable  Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in a
Registration  Statement,  such  Prospectus  or such form of Prospectus or in any
amendment  or  supplement  thereto  (it being  understood  that the  Holder  has
approved  Annex A hereto for this  purpose) or (ii) in the case of an occurrence
of an event of the type  specified  in  Section  3(d)(ii)-(vi),  the use by such
Holder of an outdated or  defective  Prospectus  after the Company has  notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the  receipt by such  Holder of the Advice  contemplated  in Section  6(d).  The
Company  shall  notify  the  Holders  promptly  of the  institution,  threat  or
assertion of any Proceeding  arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware.

                                       9
<PAGE>

      (b)  Indemnification  by Holders.  Each Holder  shall,  severally  and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents and employees,  each Person who controls the Company  (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors,  officers,  agents or employees of such controlling  Persons,  to the
fullest  extent  permitted by applicable  law,  from and against all Losses,  as
incurred,  to the extent  arising out of or based solely upon: (x) such Holder's
failure to comply with the prospectus  delivery  requirements  of the Securities
Act or (y) any untrue or alleged  untrue  statement of a material fact contained
in any Registration Statement, any Prospectus,  or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or  relating  to any  omission  or alleged  omission  of a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading (i) to the extent, but only to the extent, that such untrue statement
or omission is  contained  in any  information  so  furnished in writing by such
Holder to the Company specifically for inclusion in such Registration  Statement
or such  Prospectus  or (ii) to the extent  that (1) such untrue  statements  or
omissions are based solely upon  information  regarding such Holder furnished in
writing to the  Company by such  Holder  expressly  for use  therein,  or to the
extent that such  information  relates to such Holder or such Holder's  proposed
method of distribution of Registrable  Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement
(it being  understood  that the  Holder  has  approved  Annex A hereto  for this
purpose),  such  Prospectus  or such form of  Prospectus  or in any amendment or
supplement  thereto or (2) in the case of an  occurrence of an event of the type
specified  in Section  3(d)(ii)-(vi),  the use by such  Holder of an outdated or
defective  Prospectus after the Company has notified such Holder in writing that
the  Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice  contemplated  in Section 6(d). In no event shall the liability of
any selling Holder  hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

      (c) Conduct of  Indemnification  Proceedings.  If any Proceeding  shall be
brought or asserted  against  any Person  entitled to  indemnity  hereunder  (an
"Indemnified  Party"),  such Indemnified  Party shall promptly notify the Person
from whom  indemnity is sought (the  "Indemnifying  Party") in writing,  and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel  reasonably  satisfactory to the Indemnified Party and
the  payment  of all fees and  expenses  incurred  in  connection  with  defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve  the  Indemnifying  Party of its  obligations  or  liabilities
pursuant  to this  Agreement,  except  (and only) to the extent that it shall be
finally determined by a court of competent  jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.

                                       10
<PAGE>

      An Indemnified  Party shall have the right to employ  separate  counsel in
any such Proceeding and to participate in the defense thereof,  but the fees and
expenses of such counsel  shall be at the expense of such  Indemnified  Party or
Parties  unless:  (1) the  Indemnifying  Party has agreed in writing to pay such
fees and  expenses;  (2) the  Indemnifying  Party shall have failed  promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory  to such  Indemnified  Party in any such  Proceeding  after  notice
thereof in accordance with the terms of this Agreement; or (3) the named parties
to any such  Proceeding  (including  any  impleaded  parties)  include both such
Indemnified  Party and the Indemnifying  Party, and such Indemnified Party shall
have been advised in writing by counsel that a material  conflict of interest is
likely to exist if the same counsel were to represent such Indemnified Party and
the Indemnifying  Party (in which case, if such  Indemnified  Party notifies the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and the reasonable fees and expenses of one
separate  counsel  shall  be at the  expense  of the  Indemnifying  Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected  without its written  consent,  which consent shall not be unreasonably
withheld.  No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any  Indemnified  Party is a party,  unless  such  settlement  includes an
unconditional  release of such  Indemnified  Party from all  liability on claims
that are the subject matter of such Proceeding.

      Subject to the terms of this  Agreement,  all reasonable fees and expenses
of the Indemnified  Party (including  reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party,  as incurred,  within ten Trading Days of written  notice  thereof to the
Indemnifying  Party;  provided,   that  the  Indemnified  Party  shall  promptly
reimburse  the  Indemnifying  Party for that  portion of such fees and  expenses
applicable to such actions for which such  Indemnified  Party is not entitled to
indemnification  hereunder,  determined  based upon the  relative  faults of the
parties.

      (d)  Contribution.  If the  indemnification  under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses,  then each  Indemnifying  Party shall contribute to the
amount  paid or payable by such  Indemnified  Party,  in such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  Indemnifying  Party  and
Indemnified  Party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  Indemnifying  Party and  Indemnified  Party shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such Indemnifying  Party or Indemnified Party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the  limitations set forth in this  Agreement,  any reasonable  attorneys' or
other reasonable fees or expenses  incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the  indemnification  provided for in this Section was  available to
such party in accordance with its terms.

                                       11
<PAGE>

      The  parties  hereto  agree  that it would  not be just and  equitable  if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds  actually  received  by such  Holder  from the sale of the  Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has  otherwise  been  required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.

      The indemnity and contribution agreements contained in this Section are in
addition  to any  liability  that  the  Indemnifying  Parties  may  have  to the
Indemnified Parties.

      6. Miscellaneous

      (a) Remedies.  In the event of a breach by the Company or by a Holder,  of
any of their  obligations under this Agreement,  each Holder or the Company,  as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific  performance of its rights under this  Agreement.  The Company and each
Holder agree that monetary damages would not provide  adequate  compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement  and  hereby  further  agrees  that,  in the event of any  action  for
specific  performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

      (b) No  Piggyback  on  Registrations.  Neither  the Company nor any of its
security  holders (other than the Holders in such capacity  pursuant hereto) may
include  securities of the Company in the initial  Registration  Statement other
than  the  Registrable  Securities.   The  Company  shall  not  file  any  other
registration  statements  until  the  initial  Registration  Statement  required
hereunder is declared  effective by the  Commission,  provided that this Section
6(b) shall not prohibit the Company from filing amendments to or replacements of
registration statements originally filed prior to the date hereof on the same or
different Commission forms from the original registration statement filing.

      (c) Compliance.  Each Holder covenants and agrees that it will comply with
the prospectus  delivery  requirements of the Securities Act as applicable to it
in connection  with sales of Registrable  Securities  pursuant to a Registration
Statement.

      (d)  Discontinued  Disposition.  Each Holder agrees by its  acquisition of
such  Registrable  Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind  described in Section 3(d),  such Holder
will forthwith  discontinue  disposition of such Registrable  Securities under a
Registration  Statement  until  such  Holder's  receipt  of  the  copies  of the
supplemented  Prospectus and/or amended Registration  Statement,  or until it is
advised in writing (the  "Advice") by the Company that the use of the applicable
Prospectus  may be resumed,  and, in either  case,  has  received  copies of any
additional  or  supplemental  filings  that are  incorporated  or  deemed  to be
incorporated  by reference in such  Prospectus or  Registration  Statement.  The
Company  will use its  commercially  best  efforts to ensure that the use of the
Prospectus may be resumed as promptly as it practicable.  The Company agrees and
acknowledges that any periods during which the Holder is required to discontinue
the disposition of the Registrable  Securities hereunder shall be subject to the
provisions of Section 2(b). The Company may provide  appropriate  stop orders to
enforce the provisions of this paragraph.

                                       12
<PAGE>

      (e)  Piggy-Back  Registrations.  If at any time  during the  Effectiveness
Period  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities and the Company shall determine to prepare and file with
the  Commission  a  registration  statement  relating to an offering for its own
account or the account of others under the  Securities  Act of any of its equity
securities,  other than on Form S-4 or Form S-8 (each as  promulgated  under the
Securities Act) or their then  equivalents  relating to equity  securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit  plans,  then the Company shall send to each Holder a written  notice of
such  determination  and, if within  fifteen days after the date of such notice,
any such Holder shall so request in writing,  the Company  shall include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Holder requests to be registered; provided, however, that, the Company shall not
be required to register any Registrable Securities pursuant to this Section 6(e)
that are  eligible  for resale  pursuant  to Rule 144(k)  promulgated  under the
Securities  Act,  or  that  are the  subject  of a then  effective  Registration
Statement,  or under  amendments to or replacements  of registration  statements
referenced in the proviso to the last sentence of Section 6(b) hereof.

      (f) Amendments and Waivers.  The provisions of this  Agreement,  including
the provisions of this sentence,  may not be amended,  modified or supplemented,
and waivers or  consents to  departures  from the  provisions  hereof may not be
given,  unless the same shall be in writing  and signed by the  Company  and the
Holders  of at  least  66%  of  the  then  outstanding  Registrable  Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof  with  respect  to a matter  that  relates  exclusively  to the rights of
certain  Holders and that does not directly or  indirectly  affect the rights of
certain other Holders may be given by Holders of at least 66% of the Registrable
Securities to which such waiver or consent relates; provided,  however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

      (g) Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder  shall be delivered as set forth
in the Purchase Agreement.

      (h) Successors and Assigns.  This Agreement  shall inure to the benefit of
and be binding upon the successors and permitted  assigns of each of the parties
and shall  inure to the benefit of each  Holder.  The Company may not assign its
rights or obligations  hereunder without the prior written consent of all of the
Holders of the then-outstanding  Registrable Securities.  Each Holder may assign
their respective  rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

                                       13
<PAGE>

      (i)  No  Inconsistent  Agreements.  Neither  the  Company  nor  any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its  subsidiaries,  on or  after  the  date of this  Agreement,  enter  into any
agreement  with  respect  to its  securities,  that  would  have the  effect  of
impairing  the rights  granted to the  Holders in this  Agreement  or  otherwise
conflicts  with the  provisions  hereof.  Except as set forth on the  Disclosure
Schedules attached to the Purchase Agreement, other than as set forth in the SEC
Reports,  neither the Company nor any of its subsidiaries has previously entered
into any agreement  granting any registration  rights with respect to any of its
securities to any Person that have not been satisfied in full.

      (j)  Execution  and  Counterparts.  This  Agreement may be executed in any
number of counterparts,  each of which when so executed shall be deemed to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

      (k) Governing Law. All questions  concerning the  construction,  validity,
enforcement  and  interpretation  of this Agreement shall be determined with the
provisions of the Purchase Agreement.

      (l) Cumulative  Remedies.  The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

      (m) Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

      (n)  Headings.  The  headings in this  Agreement  are for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

      (o) Independent Nature of Holders' Obligations and Rights. The obligations
of each Holder  hereunder are several and not joint with the  obligations of any
other Holder  hereunder,  and no Holder shall be  responsible in any way for the
performance of the obligations of any other Holder hereunder.  Nothing contained
herein or in any other  agreement or document  delivered at any closing,  and no
action  taken by any  Holder  pursuant  hereto  or  thereto,  shall be deemed to
constitute the Holders as a partnership,  an association, a joint venture or any
other kind of entity,  or create a  presumption  that the Holders are in any way
acting  in  concert  with  respect  to  such  obligations  or  the  transactions
contemplated  by this  Agreement.  Each Holder  shall be entitled to protect and
enforce its rights,  including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.

                              ********************

                                       14
<PAGE>

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

                                        ONETRAVEL HOLDINGS, INC.

                                        By: \s\  Marc E. Bercoon
                                            ----------------------
                                             Name:  Marc E. Bercoon
                                             Title:  President

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       15
<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO OTV RRA]

Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       16
<PAGE>

                              Plan of Distribution

      Each Selling Stockholder (the "Selling  Stockholders") of the common stock
("Common  Stock") of  OneTravel  Holdings,  Inc.,  a Delaware  corporation  (the
"Company") and any of their pledgees,  assignees and successors-in-interest may,
from  time to time,  sell  any or all of their  shares  of  Common  Stock on the
Trading Market or any other stock exchange,  market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated  prices.  A  Selling  Stockholder  may  use  any  one or  more of the
following methods when selling shares:

      o     ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits purchasers;

      o     block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      o     an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      o     privately negotiated transactions;

      o     settlement of short sales  entered into after the effective  date of
            the registration statement of which this prospectus is a part;

      o     broker-dealers  may agree with the  Selling  Stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any such methods of sale;

      o     through  the  writing or  settlement  of  options  or other  hedging
            transactions, whether through an options exchange or otherwise; or

      o     any other method permitted pursuant to applicable law.

      The Selling  Stockholders  may also sell  shares  under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available,  rather
than under this prospectus.

      Broker-dealers  engaged by the Selling  Stockholders may arrange for other
brokers-dealers to participate in sales.  Broker-dealers may receive commissions
or discounts from the Selling  Stockholders  (or, if any  broker-dealer  acts as
agent  for the  purchaser  of  shares,  from the  purchaser)  in  amounts  to be
negotiated,  but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage  commission
in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

                                       17
<PAGE>

      In connection with the sale of the Common Stock or interests therein,  the
Selling  Stockholders may enter into hedging transactions with broker-dealers or
other  financial  institutions,  which may in turn  engage in short sales of the
Common Stock in the course of hedging the  positions  they  assume.  The Selling
Stockholders  may also sell shares of the Common  Stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the Common
Stock to  broker-dealers  that in turn may sell these  securities.  The  Selling
Stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

      The  Selling  Stockholders  and any  broker-dealers  or  agents  that  are
involved  in selling  the shares may be deemed to be  "underwriters"  within the
meaning of the Securities Act in connection with such sales. In such event,  any
commissions  received  by such  broker~dealers  or agents  and any profit on the
resale  of the  shares  purchased  by  them  may be  deemed  to be  underwriting
commissions or discounts under the Securities Act. Each Selling  Stockholder has
informed  the  Company  that it does not have any written or oral  agreement  or
understanding,  directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      The Company is required to pay certain fees and  expenses  incurred by the
Company  incident to the  registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses,  claims,  damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities  Act, they will be subject to the prospectus  delivery
requirements of the Securities Act. In addition,  any securities covered by this
prospectus  which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather  than  under  this  prospectus.  Each  Selling
Stockholder  has advised us that they have not entered  into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in  connection  with the proposed sale of the resale shares by the
Selling Stockholders.

      We agreed to keep this  prospectus  effective until the earlier of (i) the
date on which  the  shares  may be resold by the  Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(e) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to the  prospectus  or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In addition,  in certain states,  the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable  state or an exemption  from the  registration  or  qualification
requirement is available and is complied with.

                                       18
<PAGE>

      Under applicable rules and regulations  under the Exchange Act, any person
engaged in the distribution of the resale shares may not  simultaneously  engage
in market making  activities with respect to the Common Stock for the applicable
restricted  period, as defined in Regulation M, prior to the commencement of the
distribution.   In  addition,  the  Selling  Stockholders  will  be  subject  to
applicable  provisions  of the  Exchange  Act  and  the  rules  and  regulations
thereunder,  including Regulation M, which may limit the timing of purchases and
sales of shares of the Common  Stock by the  Selling  Stockholders  or any other
person.  We  will  make  copies  of this  prospectus  available  to the  Selling
Stockholders  and  have  informed  them of the  need to  deliver  a copy of this
prospectus to each purchaser at or prior to the time of the sale.

                                       19
<PAGE>

                                                                         Annex B

                            ONETRAVEL HOLDINGS, INC.

                 Selling Securityholder Notice and Questionnaire

      The  undersigned  beneficial  owner of common  stock,  par value $0.04 per
share (the "Common Stock"), of OneTravel Holdings,  Inc., a Delaware corporation
(the "Company"), (the "Registrable Securities") understands that the Company has
filed or  intends  to file with the  Securities  and  Exchange  Commission  (the
"Commission")   a   registration   statement  on  Form  S-1  or  Form  S-3  (the
"Registration  Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the  "Securities  Act"),  of the Registrable
Securities,  in accordance with the terms of the Registration  Rights Agreement,
dated as of October ____, 2005 (the "Registration Rights Agreement"),  among the
Company and the Purchasers  named  therein.  A copy of the  Registration  Rights
Agreement  is  available  from the Company upon request at the address set forth
below.  All  capitalized  terms not  otherwise  defined  herein  shall  have the
meanings ascribed thereto in the Registration Rights Agreement.

      Certain   legal   consequences   arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE

      The  undersigned  beneficial  owner  (the  "Selling   Securityholder")  of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.

                                       20
<PAGE>

The  undersigned  hereby  provides the following  information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1. Name.

         (a)      Full Legal Name of Selling Securityholder

                  --------------------------------------------------------------

         (b)      Full Legal Name of  Registered  Holder (if not the same as (a)
                  above) through which  Registrable  Securities Listed in Item 3
                  below are held:

                  --------------------------------------------------------------

         (c)      Full Legal  Name of  Natural  Control  Person  (which  means a
                  natural person who directly or indirectly alone or with others
                  has power to vote or dispose of the securities  covered by the
                  questionnaire):

                  --------------------------------------------------------------

2. Address for Notices to Selling Securityholder:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Telephone:
          ----------------------------------------------------------------------
Fax:
          ----------------------------------------------------------------------
Contact Person:
          ----------------------------------------------------------------------

3. Beneficial Ownership of Registrable Securities:

         (a) Type and Principal  Amount of Registrable  Securities  beneficially
owned:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                                       21
<PAGE>

4. Broker-Dealer Status:

      (a)   Are you a broker-dealer?

                                   Yes |_|      No |_|

      (b)   If  "yes"  to  Section  4(a),  did  you  receive  your   Registrable
            Securities as compensation  for investment  banking  services to the
            Company.

                                   Yes |_|      No |_|

      Note: If no,  the  Commission's  staff has  indicated  that you  should be
            identified as an underwriter in the Registration Statement.

      (c)   Are you an affiliate of a broker-dealer?

                                   Yes |_|      No |_|

      (d)   If you are an affiliate of a broker-dealer,  do you certify that you
            bought  the  Registrable   Securities  in  the  ordinary  course  of
            business,  and  at  the  time  of the  purchase  of the  Registrable
            Securities to be resold,  you had no  agreements or  understandings,
            directly  or   indirectly,   with  any  person  to  distribute   the
            Registrable Securities?

                                   Yes |_|      No |_|

      Note: If no,  the  Commission's  staff has  indicated  that you  should be
            identified as an underwriter in the Registration Statement.

5. Beneficial  Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

      Except  as set  forth  below in this  Item 5, the  undersigned  is not the
      beneficial or registered owner of any securities of the Company other than
      the Registrable Securities listed above in Item 3.

      (a) Type and Amount of Other Securities  beneficially owned by the Selling
Securityholder:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                                       22
<PAGE>

6. Relationships with the Company:

      Except  as  set  forth  below,  neither  the  undersigned  nor  any of its
      affiliates,  officers, directors or principal equity holders (owners of 5%
      of more of the equity securities of the undersigned) has held any position
      or office or has had any other material  relationship with the Company (or
      its predecessors or affiliates) during the past three years.

      State any exceptions here:

         -----------------------------------------------------------------------

         -----------------------------------------------------------------------

      The undersigned  agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein that may occur  subsequent to the
date hereof at any time while the Registration Statement remains effective.

      By signing  below,  the  undersigned  consents  to the  disclosure  of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus  and  any  amendments  or  supplements   thereto.   The   undersigned
understands  that  such  information  will  be  relied  upon by the  Company  in
connection with the preparation or amendment of the  Registration  Statement and
the related prospectus.

      IN WITNESS WHEREOF the  undersigned,  by authority duly given,  has caused
this Notice and  Questionnaire  to be executed and delivered either in person or
by its duly authorized agent.

Dated:                           Beneficial Owner:
       --------------------                        -----------------------------

                                 By:
                                      ------------------------------------------
                                      Name:
                                      Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       23

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