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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 21, 2005
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ONETRAVEL HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 1-8662 23-2265039
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5775 Peachtree Dunwoody Road
Building G, Suite 300
Atlanta, Georgia 30346
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (770) 730-2860
6836 Morrison Boulevard, Suite 200, Charlotte, North Carolina 28211
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
Item 3.02. Unregistered Sale of Equity Securities.
On October 21, 2005, OneTravel Holdings, Inc. (the "Company") entered into a
Securities Purchase Agreement with institutional investors for a private
placement of 9% Secured Convertible Debentures due October 21, 2008 in the
aggregate principal amount of $12,500,000, (the "Debentures"), and associated
common stock purchase warrants (the "Warrants") to purchase 1,960,784 shares of
the Company's common stock based upon an initial exercise price of $2.55. Gross
proceeds received by the Company for the sale of the Debentures and Warrants
were $11,904,763 which were reduced by total commissions of $595,237.
The Debentures will be issued with an initial conversion price of $2.55 per
share and provide for full ratchet anti-dilution protection, provided the
exercise price will not be below $ 2.50 unless shareholder approval has been
obtained. At the initial conversion price, the Debentures are convertible into
an aggregate of 4,901,960 shares of common stock. The Debentures bear interest
at 9% per annum, payable semi-annually on January 1 and July 1. Interest is
payable in cash or, at the Company's option, in shares of common stock provided
certain conditions are satisfied.
The Debentures may be redeemed at the election of the Company at a price equal
to 125% of the principal amount, plus accrued interest, subject to the
satisfaction of certain conditions. Upon the occurrence of a change of control
or fundamental transaction as set forth in the Debentures, the holders may
require the Company to redeem the Debentures at a price equal to 125% of the
principal amount, plus accrued interest, subject to the satisfaction of certain
conditions.
The purchasers of the Debentures are granted a security interest in the assets
of the Company and in the assets of two of the Company's subsidiaries, Farequest
Holdings, Inc. and OneTravel, Inc. (the "Subsidiary Guarantors"), subject to the
liens of holders of existing indebtedness, permitted liens and permitted
indebtedness. Additionally, the Subsidiaries have agreed to guarantee the
obligations of the Company under the Debentures and the other transaction
documents.
The Warrants will be issued with an initial exercise price of $2.55 per share
and provide for full ratchet anti-dilution protection, provided the exercise
price will not be below $2.50 unless shareholder approval has been obtained. At
the initial exercise price, the Warrants are exercisable for an aggregate of
1,960,784 shares of common stock, and if fully exercised for cash at the initial
exercise price, the Warrants would yield approximately $4,999,999 of additional
proceeds to the Company.
The Warrants may be called and cancelled at the election of the Company , if
certain conditions have been met, including the VWAP (as defined in the
Warrants) of the Company's common stock having been over 200% of the exercise
price for 20 consecutive trading days. In connection with a fundamental
transaction (as defined in the Warrant), the Warrants may also be called and
cancelled at a price equal to the value of the Warrants as determined in
accordance with the Black-Scholes option pricing formula, subject to the
satisfaction of certain conditions.
The Company has agreed to file a registration statement with the Securities and
Exchange Commission in order to register the resale of the shares issuable upon
conversion of the Debentures and the shares issuable upon exercise of the
Warrants.
The holders may not convert the Debentures or exercise the warrants to the
extent that, after giving effect to such conversion or exercise, as the case may
be, the holder would beneficially own in excess of 4.99% of the number of shares
of common stock of the company outstanding immediately after giving effect to
such conversion, calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
The Company intends to use approximately $1,000,000 of the proceeds from this
issuance for the repayment, without interest or other payment, of interim
loans provided to the Company by its Chairman and Chief Executive Officer,
William A. Goldstein. The Company expects to use the remainder of the proceeds
from this issuance to pay interest on its indebtedness and for general working
capital purposes.
The transaction was approved by the Company's Board of Directors on October 19,
2005. The offering, sale and issuance of the Debentures and the Warrants will be
effected pursuant to the exemption from registration provided by Rule 506
promulgated under the Securities Act of 1933, as amended. The Debentures and
Warrants have not been registered under the Securities Act of 1933, as amended,
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
This summary description of the Securities and transaction described by the
agreements does not purport to be complete and is qualified in its entirety by
reference to the form of the agreements and other documents that are filed as
exhibits hereto.
The press release issued by the Registrant on October 24, 2005 with respect to
the transaction is filed herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
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4.1 Form of Debenture
4.2 Form of Warrant
10.1 Securities Purchase Agreement dated October 21, 2005
among the Company and the purchasers identified on
the signature pages thereto
10.2 Registration Rights Agreement dated October 21, 2005
among the Company and the purchasers signatory
thereto
10.3 Escrow Agreement dated October 21, 2005 among the
Company, the Escrow Agent named therein and the
purchasers signatory thereto
10.4 Security Agreement dated October 21, 2005 among the
Company, each of the Subsidiary Guarantors and the
purchasers signatory thereto
10.5 Subsidiary Guarantee dated October 21, 2005 by each
of the Subsidiary Guarantors.
99.1 Press Release issued October 24, 2005
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 24, 2005
ONETRAVEL HOLDINGS, INC.
By: /s/ Marc E. Bercoon
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Marc E. Bercoon,
President
Exhibit Index
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Exhibit No. Description
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4.1 Form of Debenture
4.2 Form of Warrant
10.1 Securities Purchase Agreement dated October 21, 2005
among the Company and the purchasers identified on
the signature pages thereto
10.2 Registration Rights Agreement dated October 21, 2005
among the Company and the purchasers signatory
thereto
10.3 Escrow Agreement dated October 21, 2005 among the
Company, the Escrow Agent named therein and the
purchasers signatory thereto
10.4 Security Agreement dated October 21, 2005 among the
Company, each of the Subsidiary Guarantors and the
purchasers signatory thereto
10.5 Subsidiary Guarantee dated October 21, 2005 by each
of the Subsidiary Guarantors.
99.1 Press Release issued October 24, 2005