ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of October 21, 2005,
by and among OneTravel Holdings, Inc., a Delaware corporation (the "Company"),
the purchasers signatory hereto (each a "Purchaser" and together the
"Purchasers"), and Feldman Weinstein LLP, with an address at 420 Lexington
Avenue, New York, New York 10170-0002, facsimile number (212) 401-4741 (the
"Escrow Agent"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Securities Purchase Agreement referred to in the first
recital.
W I T N E S S E T H:
WHEREAS, the Purchasers will be purchasing from the Company, severally and
not jointly with the other Purchasers, in the aggregate, up to $13,500,000 in
the aggregate Principal Amount of the Secured Convertible Debentures (the
"Debentures") and the Warrants on the Closing Date as set forth in the
Securities Purchase Agreement (the "Purchase Agreement") dated the date hereof
between the Purchasers and the Company, which securities will be issued under
the terms contained herein and in the Purchase Agreement; and
WHEREAS, it is intended that the purchase of the securities be consummated
in accordance with the requirements set forth in Regulation D promulgated under
the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Purchasers have requested that the Escrow
Agent hold the Subscription Amounts in escrow until the Escrow Agent has
received the Release Notice in the form attached hereto from the Company and
each Purchaser;
NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW
1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
up to $13,500,000, in the aggregate, of the Debentures and the Warrants as
contemplated by the Purchase Agreement.
1.2. Upon the Escrow Agent's receipt of Subscription Amounts of not less
than $10,000,000 in the aggregate for the Closing into its master escrow
account, together with executed counterparts of this Agreement, the Purchase
Agreement, the Security Agreement, and the Registration Rights Agreement from
each Purchaser, it shall telephonically advise the Company, or the Company's
designated attorney or agent, of its receipt of the aggregate Subscription
Amounts into its master escrow account and its receipt of such executed
counterparts.
1
1.3. Wire transfers to the Escrow Agent shall be made as follows:
STERLING NATIONAL BANK
622 3RD AVENUE
NEW YORK, NY 10017
ACCOUNT NAME: FELDMAN WEINSTEIN LLP
ABA ROUTING NO: 026007773
ACCT NO: 0814180101
REMARK: OTV/[FUND NAME]
1.4 The Company, promptly following being advised by the Escrow Agent that
the Escrow Agent has received the aggregate Subscription Amounts of not less
than $10,000,000 in the aggregate for the Closing along with facsimile copies of
counterpart signature pages of the Purchase Agreement, Registration Rights
Agreement, the Security Agreement and this Agreement from each Purchaser, shall
deliver to the Escrow Agent the following:
(a) certificates evidencing the shares of Debentures, registered in
the name of such Purchaser;
(b) certificates representing the Warrants;
(c) the Company's executed counterpart of the Purchase Agreement;
(d) the Company's executed counterpart of the Registration Rights
Agreement;
(e) the executed opinion of Company Counsel, in the form of Exhibit
D to the Purchase Agreement;
(f) the Company's original executed counterpart of this Escrow
Agreement; and
(g) the Company's original executed counterpart of the Security
Agreement, along with the Security Documents.
1.5 In the event that the foregoing items are not in the Escrow Agent's
possession within five (5) Trading Days of the Escrow Agent notifying the
Company that the Escrow Agent has custody of the Subscription Amounts of not
less than $10,000,000 in the aggregate for the Closing, then each Purchaser
shall have the right to demand the return of their portion of the Subscription
Amount.
1.6 Once the Escrow Agent receives by mail, overnight delivery or
facsimile, a Release Notice (the "Release Notice") in the form attached hereto
as Exhibit X executed by the Company and each Purchaser, it shall (a) wire
4.7619% of $2,000,000 of the aggregate Subscription Amounts per the written
instructions of Roth Capital Partners, LLC, (b) wire 4.7619% of $10,500,000 of
the aggregate Subscription Amounts per the written instructions of HPC, and (c)
wire the remainder of the aggregate Subscription Amounts after the wire
transfers set forth in Section 1.6(a) and 1.6(b) above, to the Company's account
listed in Section 1.7 below, net of $20,000 per the instructions of HPC.
2
1.7 Wire transfers to the Company shall be made pursuant to written
instructions from the Company or Company Counsel provided to the Escrow Agent on
the Closing Date.
1.8 Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Purchase
Agreement, the Registration Rights Agreement, the Security Agreement, the Escrow
Agreement and the opinion of counsel delivered to the appropriate parties and
upon notification from the Company that it has received approval of the
transaction from the American Stock Exchange, the Debentures and the Warrants to
the appropriate parties.
ARTICLE II
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
2.2 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement.
2.3 This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.
2.4 This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.
2.5 Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if all parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.
2.6 The parties hereto expressly agree that this Escrow Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of New York. Any action to enforce, arising out of, or
relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York City.
3
2.7 The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the Company, each Purchaser and the
Escrow Agent.
2.8 The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while
acting in good faith and in the absence of gross negligence, fraud and willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law shall be conclusive evidence of
such good faith, in the absence of gross negligence, fraud and willful
misconduct.
2.9 The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
2.10 The Escrow Agent shall not be liable in any respect on account of the
identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.
2.11 The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation; provided that the costs of such compensation shall be borne by the
Escrow Agent. The Escrow Agent has acted as legal counsel for HPC, and may
continue to act as legal counsel for HPC from time to time, notwithstanding its
duties as the Escrow Agent hereunder. The Company and the other Purchasers
consent to the Escrow Agent in such capacity as legal counsel for HPC and waives
any claim that such representation represents a conflict of interest on the part
of the Escrow Agent. The Company and the Purchasers understand that HPC and the
Escrow Agent are relying explicitly on the foregoing provision in entering into
this Escrow Agreement.
2.12 The Escrow Agent's responsibilities as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by giving written notice to the
Company and the Purchasers. In the event of any such resignation, the Purchasers
and the Company shall promptly appoint a successor Escrow Agent and the Escrow
Agent shall promptly deliver to such successor Escrow Agent any escrow funds and
other documents held by the Escrow Agent.
4
2.13 If the Escrow Agent reasonably requires other or further instruments
in connection with this Escrow Agreement or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
2.14 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or the escrow funds held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent's sole discretion (1) to retain in
the Escrow Agent's possession without liability to anyone all or any part of
said documents or the escrow funds until such disputes shall have been settled
either by mutual written agreement of the parties concerned by a final order,
decree or judgment or a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but the Escrow Agent shall
be under no duty whatsoever to institute or defend any such proceedings or (2)
to deliver the escrow funds and any other property and documents held by the
Escrow Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefore
2.15 The Company and each Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence, fraud or
willful misconduct of the Escrow Agent.
************************
5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of date first written above.
ONETRAVEL HOLDINGS, INC.
By: /s/ Marc E. Bercoon
------------------------------------------------
Name: Marc E. Bercoon
Title: President
With a copy to (which shall not constitute notice):
ESCROW AGENT:
FELDMAN WEINSTEIN LLP
By:
------------------------------------------------
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
[SIGNATURE PAGE OF PURCHASERS TO OTV ESCROW]
Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
Exhibit X to
Escrow Agreement
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of October 21,
2005, among OneTravel Holdings, Inc., a Delaware corporation (the "Company"),
the Purchasers signatory thereto and Feldman Weinstein LLP, as Escrow Agent (the
"Escrow Agreement"; capitalized terms used herein and not defined shall have the
meaning ascribed to such terms in the Escrow Agreement), hereby notify the
Escrow Agent that each of the conditions precedent to the purchase and sale of
the Securities set forth in the Securities Purchase Agreement have been
satisfied. The Company and the undersigned Purchaser hereby confirm that all of
their respective representations and warranties contained in the Purchase
Agreement are true and correct in all material respects as of the date hereof
(other than any representation or warranty that expressly relates to a specific
date, which representation or warranty is true and correct in all material
respects as of the date so specified), and authorize the release by the Escrow
Agent of the funds and documents to be released at the Closing as described in
the Escrow Agreement. This Release Notice shall not be effective until executed
by the Company and the Purchaser.
This Release Notice may be signed in one or more counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release Notice to be
duly executed and delivered as of this 21st day of October, 2005.
ONETRAVEL HOLDINGS, INC.
By: /s/ Marc E. Bercoon
----------------------
Name: Marc E. Bercoon
Title: President
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]
[SIGNATURE PAGE OF PURCHASERS TO OTV RELEASE]
Name of Investing Entity: __________________________
Signature of Authorized Signatory of Investing entity: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
[SIGNATURE PAGE OF PURCHASERS FOLLOWS]