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
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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