SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 23, 1998
800 TRAVEL SYSTEMS, INC
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13271 59-3343338
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation File Number) Identification No.)
4802 Gunn Highway, Tampa, Florida 33624
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, (913) 908-0903
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Item 5. Other Events.
On March 23, 1998, 800 Travel Systems, Inc. (the "Company") purchased from
The Joseph Stevens Group, LLC ("JSG," the sole shareholder of the Joseph Stevens
Group, Inc. ("Stevens")), make-whole rights which, under certain circumstances,
would have obligated 800 Travel to issue an as-yet undetermined number of shares
of its stock to JSG in January 2000 (the "Make-whole Rights").
In January 1998, simultaneously with the Company's initial public
offering, Stevens was merged into the Company and JSG was issued 383,333 shares
of the Company's Common Stock, par value $.01 per share. The merger agreement
(the "Merger Agreement") set forth the Make-whole Rights which provided that if
on January 21, 2000, the value of the 383,333 shares issued to JSG under the
Merger Agreement and then held by JSG, together with the fair value of any
consideration received for shares no longer held by JSG, was less than
$2,571,429, the Company would issue to Stevens such additional shares, based
upon the stock's then bid price, as would make up the deficiency.
In addition to obtaining a release of the Make-whole Rights, as part of
the transaction, the Company repurchased 184,615 shares of its Common Stock from
JSG, and JSG agreed to refrain from selling its remaining shares of the
Company's Common Stock over the counter until January 1, 1999. The total
consideration paid for the 184,615 shares of common stock and release of the
Make-whole Rights was $558,000.
As a result of the release of the Make-whole Rights and the redemption of
184,615 shares formerly owned by JSG, the total consideration paid by the
Company for Stevens has been reduced from (a) approximately $1,800,000 plus
383,333 shares of Common Stock with a guaranteed value of $2,571,429 to (b)
$2,450,000 plus 198,718 shares of Common Stock with no guaranteed value.
As part of the transaction, the Company assumed certain obligations under
Stevens' lease agreements for telephone switching equipment and closed on JSG's
right to require the Company to acquire office equipment in the facility
formerly operated by Stevens and now maintained by the Company, in California.
JSG pledged 100,000 shares of the Company's Common Stock to secure JSG's
obligations to indemnify the Company from claims on the switching equipment.
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Item 7. Financial Information, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
10.33 Agreement dated as of March 20, 1998 between The Joseph Stevens
Group, LLC and the Company
10.34 Pledge Agreement dated as of March 22, 1998 among The Joseph Stevens
Group, LLC, the Company and Phillips Nizer Benjamin Krim & Balloon
LLP
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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.
800 TRAVEL SYSTEMS, INC.
(Registrant)
Date: March 26, 1998 By: /s/ Mark D. Mastrini
----------------------
President and
Chief Operating Officer
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AGREEMENT
This Agreement dated March 20, 1998, is made by and between The
Joseph Stevens Group, LLC (the "Shareholder"), a California limited liability
company, and 800 Travel Systems, Inc.
("800 Travel"), a Delaware corporation.
R E C I T A L S
The parties, together with The Joseph Stevens Group, Inc. ("JSG"),
are parties to an Amended and Restated Agreement and Plan of Merger dated as of
November 11, 1996 (as previously amended referred to herein as the "Merger
Agreement"), whereby JSG has been merged into 800 Travel. Capitalized terms used
but not defined herein have the meanings ascribed thereto in the Merger
Agreement.
Article XII of the Merger Agreement provides for the issuance to
Shareholder of additional shares of Common Stock of 800 Travel ("Common Stock")
on the second anniversary of the Closing Date.
The parties desire to enter into this Agreement to provide, among
other things, for the release of Shareholder's rights under Article XII of the
Merger Agreement.
NOW, THEREFORE, in consideration of the covenants of the parties
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
<PAGE>
1. Release of Rights.
1.1 Shareholder hereby releases 800 Travel from any and all
obligations contained in Article XII of the Merger Agreement and acknowledges
that as a result of such release Shareholder is not entitled to receive any
additional shares of Common Stock from 800 Travel. Shareholder hereby assigns to
800 Travel all right, title and interest in such shares of Common Stock, if any,
as may have been issuable to Shareholder pursuant to Article XII of the Merger
Agreement.
1.2 Simultaneously with the execution and delivery hereof 800
Travel is delivering to Shareholder a certified check in the amount of
$377,563.70, the receipt of which is acknowledged, of which $250,000 is in
consideration of the release and assignment contained in Section 1.1.
2. Exercise of Put Option.
2.1 Shareholder hereby exercises the Put Option and Right
contained in Article XIV of the Merger Agreement. Shareholder shall deliver the
Put Assets to 800 Travel within ten (10) days of the date hereof. Shareholder
acknowledges that the only liabilities to which the Put Assets are to be subject
are the Put Liabilities provided for in the Merger Agreement and acknowledges
its obligation to indemnify 800 Travel and hold it harmless from all claims
against the Put Assets other than those provided for in the Merger Agreement.
2.2 Simultaneously herewith 800 Travel is delivering to
Shareholder a certified check in the amount of
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$377,563.70, the receipt of which is acknowledged, of which $127,563.30 is in
consideration of the Put Assets and 800 Travel will pay to Shareholder by wire
transfer no later than March 24, 1998, an additional $22,436.30 for the Put
Assets.
3. Purchase of Additional Shares.
3.1 Shareholder hereby agrees to sell to 800 Travel and 800
Travel hereby agrees to purchase from Shareholder 184,615 shares of the Common
Stock of 800 Travel (the "Shares"). In consideration of the 184,615 Shares 800
Travel shall pay to Shareholder an amount equal to $308,000 (the "Purchase
Price"), approximately $1.67 per share. 800 Travel shall pay the Purchase Price
to Shareholder by certified or bank check, or by wire transfer of immediately
available funds, at the Closing against delivery to 800 Travel of the
certificate or certificates representing the Shares, duly endorsed in favor of
800 Travel or accompanied by a duly executed assignment separate from
certificate in favor of 800 Travel.
3.2 The closing of the transfer of the Shares (the "Closing")
will be held on the day that 800 Travel receives the certificate or certificates
representing the Shares, but in no event later than April 3, 1998 at the offices
of 800 Travel or at such other place as the parties shall reasonably agree.
3.3 The Merger Agreement provides certain restrictions on
Shareholder's ability to sell the shares of Common Stock held by it. Shareholder
agrees that the Common Stock purchased by 800 Travel pursuant hereto shall be
deemed to be the
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83,333 shares not subject to any transfer restrictions and the first 116,667
shares becoming available for sale pursuant to the terms of the Merger
Agreement. Consequently, as a result of the purchase made hereby, Shareholder
shall not be permitted to sell any shares of Common Stock over the counter prior
to January 1, 1999.
4. WorldSpan Agreement.
4.1 Shareholder acknowledges its obligation under the Merger
Agreement to indemnify 800 Travel and hold it harmless from any and all
obligations arising under the various agreements between JSG and WorldSpan, L.P.
("Worldspan") dated on or about June 1, 1994, as amended prior to the date
hereof (such agreements include but are not limited to a Worldspan Subscriber
Agreement, a Worldspan Commercial World Agreement, a Worldspan Maintenance
Agreement, a Worldspan Marketing Assistance Agreement and a Performance plus
Agreement and are collectively referred to herein as the "Worldspan
Agreements"), except for such obligations as were to be satisfied by 800 Travel
in accordance with the terms of the Interim Operating Agreement.
4.2 800 Travel agrees to cooperate in Shareholder's efforts to
minimize Shareholder's obligations, if any, under the WorldSpan Agreement, such
cooperation to include, if necessary, limited use by 800 Travel of the equipment
provided to JSG by WorldSpan. In no event shall 800 Travel be obligated to spend
more than nominal amounts to assist Shareholder as provided herein.
5. Telephone Switch.
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5.1 Shareholder currently leases certain telephone switching
equipment (described on Schedule 5, the "Switching Equipment") from Aloha
Telecommunications ("Aloha") pursuant to an equipment lease dated December 28,
1995 (the "Aloha Lease"), which lease provides for payments of $2,290 per month
through December 2000.
800 Travel hereby agrees, at the "Switch Closing," to assume
all of the obligations under the Aloha Lease and to pay to Triad Leasing the sum
of $90,000 by certified check or wire transfer of immediately available funds.
In consideration of such assumption and the payment of such $90,000 (i)
Shareholder shall cause Triad Leasing to assign to 800 Travel all of its rights,
if any, in the Switching Equipment and under the Aloha Lease and (ii)
Shareholder shall agree to indemnify 800 Travel and hold it harmless from any
and all claims of third parties asserting any rights in and to the Switching
Equipment, provided, Shareholder's maximum liability to 800 Travel under this
Section shall not exceed $90,000. Further, Shareholder shall grant to 800 Travel
a security interest in all shares of Common Stock of 800 Travel (other than
those sold pursuant hereto) owned by Shareholder, which shall not be less than
100,000 shares of Common Stock, and the proceeds thereof to secure its
obligation to 800 Travel under this paragraph.
The closing in respect of the Switching Equipment (the "Switch
Closing") will be held upon such day as the parties shall agree, but in no event
later than April 3, 1998, at the
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office of 800 Travel or at such other place as the parties shall reasonably
agree. At the Switch Closing, in addition to the payment of the $90,000, the
parties shall execute and deliver, and cause to be executed and delivered, such
other documents as each of them may reasonably request to effectuate the
transaction contemplated by this Section, including a Pledge and Escrow
Agreement whereby Shareholder pledges its stock in favor of 800 Travel and such
stock is deposited in escrow with counsel to 800 Travel for a period to expire
no later than March 17,1999.
6. [Reserved].
7. Representations and Warranties of Shareholder
7.1 Shareholder is a limited liability company, duly organized
and validly existing under the laws of the State in which it was organized.
Shareholder has all necessary power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. Assuming due
execution and delivery by 800 Travel, this Agreement constitutes the legal,
valid and binding obligation of Shareholder enforceable in accordance with its
terms, except to the extent limited by bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally, and except that the remedy
of specific performance or similar equitable relief is available only at the
discretion of the Court before which enforcement is sought.
7.2 The execution, delivery and performance of this Agreement
by Shareholder will not (i) violate any statute, provi-
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sion of law or regulation of any governmental authority affecting the business
of Shareholder, (ii) require the issuance of any authorization, license, consent
or approval of any governmental agency (iii) conflict with or result in a breach
of any term of any mortgage, pledge, judgment, order, injunction, decree,
agreement or instrument to which Shareholder is a party, (iv) violate or
conflict with any provision of the articles of formation or operating agreement
of Shareholder or (v) require the approval, ratification or consent of any third
party.
7.3 Upon delivery to 800 Travel of the 184,615 shares referred
to in Section 3.1, in accordance with the terms hereof, such shares will be free
and clear of all pledges, liens, claims, charges, options, calls, encumbrances,
restrictions and assessments whatsoever and 800 Travel, upon payment therefore,
will acquire all right, title and interest in the 184,615 shares referred to in
Section 3.1.
7.4 Except for Scot Spencer who was retained by Shareholder
and whose fees will be paid by Shareholder, Shareholder has not dealt with any
finder, broker or similar agent in connection with this Agreement or the
transaction contemplated hereby and no other broker, finder or similar agent is
entitled to compensation in connection with this Agreement or the consummation
hereof as a result of any agreement entered into with the Shareholder.
7.5 Except for the claims of Transwest Communications Systems
("Transwest"), the claims of Aloha under the
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Aloha Lease and such claims as may be held by Triad Leasing, no party has any
right, title or interest in, or lien, claim or encumbrance upon, the Switching
Equipment, and upon consummation of the transaction contemplated hereby, 800
Travel will acquire all rights therein subject to the rights of Transwest and
Aloha.
8. Representations and Warranties of 800 Travel
8.1 800 Travel is a corporation duly incorporated and validly
existing under the laws of the State in which it was organized. 800 Travel has
all necessary power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. Assuming due execution and
delivery by Shareholder, this Agreement constitutes the legal, valid and binding
obligation of 800 Travel enforceable in accordance with its terms, except to the
extent limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and except that the remedy of specific
performance or similar equitable relief is available only at the discretion of
the Court before which enforcement is sought.
8.2 The execution, delivery and performance of this Agreement
by 800 Travel will not (i) violate any statute, provision of law or regulation
of any governmental authority affecting the business of 800 Travel, (ii) require
the issuance of any authorization, license, consent or approval of any
governmental agency (iii) conflict with or result in a breach of any term of any
mortgage, pledge, judgment, order, injunction, decree, agreement or instrument
to which 800 Travel is a party, (iv) violate or conflict
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with any provision of the articles of incorporation or by-laws of 800 Travel or
(v) require the approval, ratification or consent of any third party.
8.3 800 Travel has not dealt with any finder, broker or
similar agent in connection with this Agreement or the transaction contemplated
hereby and no broker, finder or similar agent is entitled to compensation in
connection with this Agreement or the consummation hereof as a result of any
agreement entered into with 800 Travel.
9. Conditions to Shareholder's Obligations
The obligation of Shareholder to consummate the transactions
contemplated by this Agreement, other than those being completed concurrently
with the delivery hereof, shall be subject to satisfaction, on or before the
date of the Closing or Switch Closing, as the case may be, of each of the
following conditions:
9.1 The representations and warranties of 800 Travel contained
herein shall be in all material respects true and accurate as of the date when
made and at and as of the date of the Closing or Switch Closing, as the case may
be, as though such representations and warranties were made at and as of such
dates, except for changes expressly permitted or contemplated by the terms of
this Agreement.
9.2 800 Travel shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by 800 Travel on or prior to the Closing or Switch
Closing, as the case may be.
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9.3 No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby; provided that, in the case
of such a proceeding brought by a person other than a governmental body, the
condition set forth in this sentence shall be deemed to have been satisfied if
Shareholder shall have been provided with an opinion of counsel reasonably
satisfactory to Shareholder to the effect that it is reasonably probable that
the relief sought in such proceeding will not be granted.
9.4 Certificates. 800 Travel shall have furnished Shareholder
with such certificates of 800 Travel's officers and others to evidence
compliance with the conditions set forth in this Article 9 as may be reasonably
requested by Shareholder, including a certificate (signed by an officer of 800
Travel) to the effect that all representations and warranties of 800 Travel
contained in this Agreement shall be true and correct in all material respects
at and as of the date of this Agreement and at and as of the date of the Closing
and Switch Closing as if such representations and warranties were made at and as
of such dates.
10. Conditions to obligations of 800 Travel
The obligation of 800 Travel to consummate the transactions
contemplated by this Agreement, other than those being completed concurrently
with the delivery hereof, shall be subject
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to the satisfaction, on or before the date of the Closing or Switch Closing, as
the case may be, of each of the following conditions:
10.1 The representations and warranties of Shareholder
contained herein shall be in all material respects true, complete and accurate
as of the date when made and at and as of the date of the Closing or Switch
Closing, as the case may be, as though such representations and warranties were
made at and as of such date, except for changes expressly permitted or
contemplated by the terms of this Agreement.
10.2 Shareholder shall have performed and complied with all
agreements, obligations, conditions and covenants required by this Agreement to
be performed or complied with by them on or prior to the Closing or Switch
Closing, as the case may be.
10.3 Except for the litigation involving Transwest, no suit,
action, investigation, inquiry or other proceeding by any governmental body or
other person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby; or which could reasonably be expected to damage 800 Travel
if the transaction contemplated hereby is consummated.
10.4 On the date of Closing or the Switch Closing, as the case
may be, there shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein not be consummated as so
provided or imposing
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any conditions on the consummation of the transaction contemplated hereby which
800 Travel deems unacceptable in its sole discretion.
10.5 Shareholder shall furnish 800 Travel with such
certificates evidencing compliance with the conditions set forth in this Article
10 as may be reasonably requested by 800 Travel, including a certificate (signed
by an officer of Shareholder) to the effect that all representations and
warranties of Shareholder contained in this Agreement shall be true and correct
in all material respects at and as of the date of this Agreement and at and as
of the date of Closing or Switch Closing as if such representations and
warranties were made at and as of such date.
11. Survival of Representations and Warranties; Indemnification.
11.1 The representations, warranties, covenants and agreements
of Shareholder and 800 Travel contained herein shall survive the consummation of
the transactions contemplated hereby, without regard to any investigation made
by any of the parties hereto. All such representations and warranties and all
claims and causes of action with respect thereto shall terminate upon expiration
of a period of two years beginning the date hereof. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
11.2. Shareholder shall indemnify, save and hold harmless 800
Travel, its affiliates and subsidiaries, and its and
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their respective representatives, from and against any and all costs, losses
(including without limitation diminution in value), taxes, liabilities,
obligations, damages, lawsuits, deficiencies, claims, demands, and expenses
(whether or not arising out of third-party claims), including without
limitation, attorney's fees and all amounts paid in investigation, defense or
settlement of any of the foregoing (herein "Damages"), incurred in connection
with, arising out of, resulting from or incident to (i) any breach of any
representation or warranty or the inaccuracy of any representation, made by
Shareholder in this Agreement or (ii) any breach of any covenant or agreement
made by Shareholder in this Agreement.
800 Travel shall indemnify and save and hold harmless
Shareholder from and against any and all Damages incurred in connection with,
arising out of, resulting from or incident to (i) any breach of any
representation or warranty or the inaccuracy of any representation, made by 800
Travel in this Agreement; or (ii) any breach of any covenant or agreement made
by 800 Travel in this Agreement.
The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
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If a claim for Damages (a "Claim") is to be
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall, give written notice (a
"Claim Notice") to the indemnifying party as soon as practicable after the party
entitled to indemnification becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under this
Section. If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable. The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying party's cost,
risk, and expense unless the named parties to such action or proceeding include
both the indemnifying party and the indemnified party and the indemnified party
has been advised in writing by counsel that there may be one or more legal
defenses available to such indemnified party that are different
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from or additional to those available to the indemnifying party, and (iii) to
compromise or settle such claim, which compromise or settlement shall be made
only with the written consent of the indemnified party, such consent not to be
unreasonably withheld. If the indemnifying party fails to assume the defense of
such claim within fifteen (15) calendar days after receipt of the Claim Notice,
the indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party. In the event the indemnified party assumes the defense of
the claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section, for any final judgment (subject
to any right of appeal), and the indemnifying party agrees to indemnify and hold
harmless an indemnified party from and against any Damages by reason of such
settlement or judgment.
Anything in this Agreement to the contrary
notwithstanding, 800 Travel may withhold and set off against any amounts
otherwise due Shareholder and against the shares of stock held in escrow, any
amount as to which Shareholder is obligated to indemnify 800 Travel pursuant to
any provision of this Section.
12. Miscellaneous Provisions
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12.1 This Agreement may not be amended, modified and
supplemented except by written agreement of the party to be bound by such
amendment, modification or supplement.
12.2 All rights and remedies of either party hereto are
cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
12.3 Any failure of 800 Travel, on the one hand, or
Shareholder, on the other, to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by the other but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
12.4 All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid:
(a) If to Shareholder, to:
The Joseph Stevens Group, LLC
5440 Moorehouse Drive
San Diego, California 92121
with a copy to:
Steve Rohrlick
Buccaneer Mall 106-204
St. Thomas, Virgin Islands 00802
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or to such other person or address as Shareholder shall furnish
to 800 Travel in writing.
(b) If to 800 Travel, to:
4802 Gunn Highway
Tampa, Florida 33624
Attn: Mark Mastrini
Fax: (813) 908-0080
with a copy to:
Phillips Nizer Benjamin
Krim & Ballon LLP
666 Fifth Avenue
New York, New York 10103
Attn: Vincent J. McGill
Fax: (212) 262-5152
or to such other person or address as 800 Travel shall furnish to Seller in
writing.
12.5 This Agreement and the legal relations among the parties
hereto shall be governed by and construed in accordance with the laws of the
State of Florida, without regard to its conflicts of law doctrine.
12.6 This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.7 This Agreement, pursuant to the terms hereof, set forth
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and supersede all prior negotiations,
understandings, discussions, agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
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written, by any officer, employee or representative of any party
hereto whether written or oral.
12.8 Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or corporation other than the parties hereto and
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
12.9 From time to time after the date hereof each of the
parties, at the request of the other, without payment of additional
consideration, shall execute and deliver such further documents and shall take
such further actions as the requesting party may reasonably request to
effectuate the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
Attest: JOSEPH STEVENS GROUP, LLC
- ------------------------------ By:___________________________
Steven Rohrlick, Manager
Attest: 800 TRAVEL SYSTEMS, INC.
- ------------------------------ By:_________________________
Mark Mastrini, President
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STOCK POWER
FOR VALUE RECEIVED, Joseph Stevens Group, LLC, a limited liability company
formed under the laws of the State of California, hereby sells, transfers and
assigns unto 800 Travel Systems, Inc., a Delaware corporation, one hundred
eighty-four thousand six hundred fifteen (184,615) shares of the Common Stock of
800 Travel Systems, Inc., standing in our name on the books of 800 Travel
Systems, Inc. represented by Stock Certificates numbered _________________
______________________________________________________________________________
and does hereby irrevocably constitute and appoint___________
_______________________ attorney to transfer the said one hundred eighty-four
thousand six hundred fifteen (184,615) shares on the books of 800 Travel
Systems, Inc. with full power of substitution in the premises.
Dated: March 22, 1998
Joseph Stevens Group, LLC
By:_____________________
Manager
In presence of
___________________
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STOCK POWER
FOR VALUE RECEIVED, Joseph Stevens Group, LLC, a limited liability company
formed under the laws of the State of California, hereby sells, transfers and
assigns unto____________________________
____________________________________________________________________
___________________________having an address at ___________________
____________________________________________________________________
shares of the Common Stock of 800 Travel Systems, Inc., standing in our name on
the books of 800 Travel Systems, Inc. represented by Stock Certificates numbered
__________________________________________________________________________
______________________________________________________________ and does hereby
irrevocably constitute and appoint __________________________________ attorney
to transfer the said _______________________ shares on the books of 800 Travel
Systems, Inc. with full power of substitution in the premises.
Dated: _______________
Joseph Stevens Group, LLC
By:_________________________
Manager
In presence of
___________________
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PLEDGE AGREEMENT
AGREEMENT, dated as of the 22nd day of March, 1998, by and between
Joseph Stevens Group, LLC, a California limited liability company having an
address at 5440 Moorehouse Drive, San Diego, California 92121 ("Pledgor"), and
800 Travel Systems, Inc, a Delaware corporation with an address at 4802 Gunn
Highway, Tampa, Florida 33624 ("Pledgee") and Phillips Nizer Benjamin Krim &
Ballon LLP having an office at 666 Fifth Avenue, New York, New York 10103
("Escrow Agent").
W I T N E S S E T H
WHEREAS, Pledgor and Pledgee are parties to an Agreement dated March
20, 1998 (the "Agreement"), whereby Pledgor has agreed to indemnify Pledgee
against certain claims as set forth in section 5 of such Agreement and has
agreed to pledge all of the common shares of Pledgee now owned by Pledgor as
security for such amounts as may become payable to Pledgee as a result of such
indemnity;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions herein contained, the parties agree as
follows:
1. Pledge and Grant of a Security Interest. Pledgor hereby delivers
to Escrow Agent and pledges to Pledgee, and grants to Pledgee a first priority
security interest in, 100,000 shares of Common Stock of Pledgee and all
securities issued on account
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thereof or in substitution thereof, (hereinafter the "Pledged Securities") as
security for the full and prompt payment of all amounts as may become due in
accordance with the indemnity set forth in Section 5 of the Agreement
("Indebtedness").
2. Delivery of Certificates. Concurrently herewith, Pledgor has
delivered to the Escrow Agent stock certificates evidencing the Pledged
Securities, together with stock transfer powers, duly executed in blank. So long
as any amount of the Indebtedness shall remain outstanding or unpaid, the
Pledged Securities shall be held by and in the custody of the Escrow Agent,
subject to and in accordance with the terms and provisions hereof.
3. Obligations Secured. The pledge and security interest herein
granted to Pledgee secures the following obliga- tions of Pledgor:
(a) Payment in full of such amounts as may become due pursuant
to Section 5 of the Agreement; and
(b) All costs incurred by Pledgee to obtain, preserve and
enforce this pledge and security interest, or maintain and preserve the Pledged
Securities, including (but not limited to) reasonable attorneys' fees, legal
expenses, brokers' fees and expenses of sale.
4. Covenants Representations and Warranties of Pledgor. Pledgor
covenants, represents and warrants that:
(a) The Pledged Securities are duly and validly pledged to
Pledgee in accordance with law;
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(b) Pledgor will not sell, assign, transfer, dispose of,
pledge or encumber in any manner any of the Pledged Securities, or agree or
attempt to do so, or suffer to exist any encumbrance on the Pledged Securities
created by Pledgor, except the lien of this pledge and except for sales made for
fair value, provided the proceeds of such sale are promptly deposited with the
Escrow Agent; and
(c) Pledgor shall upon request of the Pledgee, furnish to
Pledgee such stock powers, such instruments of assignment and such other
instruments as may be required by Pledgee in order to permit or effect transfer
of the Pledged Securities in accordance with the terms of this Agreement.
5. Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) The failure of Pledgor to promptly pay any amount which
may become due pursuant to Section 5 of the Agreement; or
(b) Default in the timely performance by Pledgor of any
obligation or covenant contained herein which is not cured within five (5) days
following written notice thereof to Pledgor.
6. Rights of Pledgor. Unless and until an Event of Default, as
defined in this Agreement, shall have occurred;
(a) Pledgor shall be entitled to exercise all voting and
consensual powers pertaining to the Pledged Securities or any part thereof for
all purposes not inconsistent with the terms and provisions of this Agreement;
and
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(b) Pledgor shall be entitled to receive and retain all
dividends (other than stock or liquidating dividends) on, the Pledged Securities
or any part thereof; provided that all dividends in stock or property
representing stock, and all liquidating dividends or distributions or returns of
capital upon or in respect of the Pledged Securities or any part thereof or
resulting from any split, revision or reclassification of the shares evidenced
by the Pledged Securities or any part thereof or received in exchange for the
Pledged Securities or any part thereof as a result of a merger, consolidation or
otherwise, shall be deemed to be "Pledged Securities" hereunder and shall be
paid, transferred or delivered directly to the Escrow Agent or if paid to or
received by Pledgor, shall be immediately upon receipt thereof, paid over,
transferred and delivered by the Pledgor to the Escrow Agent and shall be held
by the Escrow Agent as additional collateral pledged under and subject to the
terms of this Agreement.
7. Rights of Pledgee upon Default. If an Event of Default, as
defined in this Agreement, shall occur, Pledgor agrees to the following:
(a) Pledgee or its nominee or nominees shall have the sole and
exclusive right to exercise all voting and consensual powers pertaining to the
Pledged Securities or any part thereof and shall exercise such powers in such
manner and at such times as the holders of a majority of the principal amount of
the Indebtedness ("Required Majority") may elect; and
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(b) All dividends, payments of interest and other
distributions of every character made upon or in respect of the Pledged
Securities or any part thereof shall be deemed to be "Pledged Securities" and
shall be paid directly to and shall be held by the Escrow Agent as additional
collateral pledged under and subject to the terms of this Agreement.
8. Remedies of Pledgee upon Default. If an Event of Default, as
defined in this Agreement, shall have occurred and be continuing for a period of
five (5) business days, the Escrow Agent shall, at the direction of the Pledgee,
without any notice to Pledgor sell the Pledged Securities or any part thereof at
public or private sale for cash, upon credit, or for future delivery, and at
such price or prices as the Escrow Agent may deem best, and Pledgee may be the
purchaser of any and all of the Pledged Securities so sold and may apply upon
the purchase price therefor any indebtedness secured hereby and thereafter hold
the same absolutely free from any right or claim of whatsoever kind. In
connection with such sale or sales, the Escrow Agent may retain a broker or such
other agent or agents as it may deem necessary to effect such sale or sales.
Upon any such sale the Escrow Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Pledged Securities so sold. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right of whatsoever kind, including ny equity or right of redemption of Pledgor,
who hereby specifically waives all rights of redemption, stay or appraisal which
it has or may have under any
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rule of law or statute now existing or hereafter adopted. The Escrow Agent shall
give Pledgor ten (10) days' written notice in the manner specified in this
Agreement (which shall satisfy any requirement of notice or reasonable notice in
any applicable statute) of its intention to make any such public or private
sale. Such notice, in case of public sale, shall state the time and place fixed
for such sale. Any such public sale shall be held at such time or times, within
the ordinary business hours and at such place or places in the City of New York,
New York, as the Escrow Agent may fix in the notice of such sale. At any sale
the Pledged Securities may be sold in one lot as an entirety or in separate
parcels as the Escrow Agent may determine. The Escrow Agent shall not be
obligated to make any sale pursuant to any such notice. The Escrow Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at any time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the Pledged
Securities on credit or for future delivery, the Pledged Securities so sold may
be retained by the Escrow Agent until the selling price is paid by the purchaser
thereof, but the Escrow Agent shall incur no liability in case of the failure of
such purchaser to take up and pay for the Pledged Securities so sold, and in
case of any such failure, such Pledged Securities may again be sold upon like
notice.
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9. Application of Proceeds by Escrow Agent. In the event that the
Escrow Agent elects to sell or otherwise dispose of the Pledged Securities as
provided in Section 8 hereof, any amounts held, realized or received by the
Escrow Agent pursuant to the provisions hereof, including the proceeds of any
sale of the Pledged Securities or any part thereof and any amounts received by
the Escrow Agent pursuant to subsection (b) of Section 6 or to subsection (b) of
Section 7 hereof, shall be applied by the Escrow Agent toward the satisfaction
of the obligations of Pledgor secured hereby. Any amounts and any Pledged
Securities remaining after such application shall be paid or delivered to
Pledgor, its successors or assigns, or as a court of competent jurisdiction may
direct.
10. Escrow Agent as Pledgor's Agent. Pledgor hereby appoints the
Escrow Agent its agent and attorney-in-fact for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instruments
which the Escrow Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment as agent and attorney-in-fact is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
after the occurrence of an Event of Default, the Escrow Agent shall have the
right to receive, collect and endorse all checks made payable to Pledgor or its
order representing any dividend, payment of interest, or other distribution in
respect of the Pledged Securities or any part thereof and to give full discharge
for the same.
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11. No Waiver. No failure on the part of Pledgee or the Escrow Agent
to exercise, and no delay in exercising any right, power or remedy hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
Pledgee or the Escrow Agent of any right, power or remedy hereunder preclude any
other or future exercise thereof or the exercise of any other right, power or
remedy.
12. Termination of Security Interest. Unless Pledgee shall have
brought a claim for indemnification pursuant to paragraph 5 of the Agreement
which then remains unsatisfied the security interest and pledge evidenced hereby
or provided for herein shall terminate as of March 17, 1999, and the Pledged
Securities shall become free and clear of such security interests and pledges
and Escrow Agent shall return the Pledged Securities to Pledgor.
13. Notices. All notices and other communications relating to this
Agreement shall be in writing and shall be either personally delivered or sent
by overnight courier, or by certified mail to the parties at their addresses set
forth above. Any party may from time to time give notice changing his or its
address for notice to it (or for copies) by notice to the other parties. Notice
shall be effective on the date of delivery.
14. Entire Understanding. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and it
incorporates and merges all previous communications and understandings (oral or
written) as to the subject
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matter hereof. No modification or waiver of any provisions of this Agreement,
nor consent to any departure from the provisions hereof, shall be effective
unless the same shall be in writing signed by the parties and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which it is given. No notice to a party shall entitle such party to any
other or further notice in other or similar circumstances unless expressly
provided for herein. No course of dealing among the parties hereto shall
operates as a waiver of any rights under this Agreement.
15. Binding Agreement. The provisions of this Agreement, and all
additional documents, if any, executed pursuant hereto, shall be binding upon,
and inure to the benefit of, parties to this Agreement, their heirs, executors,
and administrators, successors and assigns. This document is intended as a
binding agreement to the fullest extent possible consistent with its terms.
16. Date for Performance. If the date specified for any performance
under this Agreement shall be a Saturday, Sunday or legal holiday, such date and
time for performance shall be postponed to the next day which is not a Saturday,
Sunday or national or state of New York legal holiday.
17. Further Assurances. Each of the parties hereto agrees to
execute, acknowledge, deliver, file, record and publish such further
certificates, instruments, agreements and other documents and to take all such
further action as may be required by law or be necessary or appropriate in order
to carry out the provisions of this Agreement.
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18. Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Florida applicable to agreements made and to be performed entirely
within such State.
19. Counterparts. This Agreement may be executed in one or more
counterparts, and said executed counterparts, when taken together, shall
constitute the binding agreement of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
Joseph Stevens Group, LLC
By:___________________________________
Manager
800 Travel Systems, Inc.
By:__________________________________
ESCROW AGENT:
Phillips Nizer Benjamin
Krim & Ballon LLP
_________________________
A Partner
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