1
EXHIBIT 2.1
CONFIDENTIAL
CONTRIBUTION AND RESTRUCTURING AGREEMENT
This Contribution and Restructuring Agreement (this "Agreement"), dated
effective as of July 21, 1995, among Pegasus Systems, Inc., a Delaware
corporation (the "Company"), and all of the stockholders of The Hotel Clearing
Corporation, a Delaware corporation ("HCC"), and all of the stockholders of The
Hotel Industry Switch Company, a Delaware corporation ("THISCO"), set forth in
Schedule A attached hereto (collectively referred to herein as the
"Stockholders").
WITNESSETH:
WHEREAS, the Stockholders, as the only stockholders of HCC and/or
THISCO, desire to combine the businesses of HCC and THISCO as subsidiaries of a
common parent corporation pursuant to the terms of this Agreement; and
WHEREAS, the Company has been formed to serve as the parent corporation
in connection with such restructuring; and
WHEREAS, as part of a single plan to be effectuated pursuant to this
Agreement, the Stockholders, other than Lodging Network, Inc. ("LNI"), agree to
contribute all of their respective shares of capital stock (whether preferred
or common) and any other stock interests in HCC and THISCO (collectively, the
"Stock") to the Company in exchange for Company Common Stock as part of a
transaction intended to qualify as a tax free transaction under Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Company has agreed to grant LNI an option to exchange its
entire stock interest in HCC for shares of Company Common Stock and LNI has
agreed to join in this Agreement on the terms herein specified.
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and provisions contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
TRANSACTIONS
1.1 Closing Transactions. Subject to and upon the terms and conditions
contained herein, the closing pursuant to this Agreement (the "Closing") shall
take place at the Company's address at 0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000,
Xxxxxx, Xxxxx 00000, at 10:00 a.m., local time, on July 21, 1995, or at such
other time as shall be agreed to by the parties (the "Closing Date"). The
parties hereto (as applicable) shall simultaneously take the following actions
and execute and deliver the following documents:
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(a) HCC Stock Contribution. Each HCC stockholder, other than LNI,
shall contribute all of such stockholder's Stock of HCC to the Company
by delivering to the Company all necessary stock certificates, stock
powers or other documents as may be necessary to effect the transfer of
the Stock to the Company. In exchange, the Company shall issue and
deliver to each of them a certificate for the number of shares of
Company Common Stock as specified in Schedules A and C attached hereto.
(b) THISCO Stock Contribution. Each THISCO stockholder shall
contribute all of such stockholder's shares of THISCO to the Company by
delivering to the Company all necessary stock certificates, stock powers
or other documents as may be necessary to effect the transfer of the
Stock to the Company. In exchange, the Company shall issue and deliver
to each of them a certificate for the number of shares of Company Common
Stock as specified in Schedule A attached hereto.
(c) Stockholders Agreement. The Company and each Stockholder,
other than LNI, shall execute and deliver to one another the
Stockholders Agreement (herein so called) dated the Closing Date in
substantially the form of Exhibit 1 to this Agreement.
(d) HCC Debt. Each HCC stockholder who previously made one or
more loans to HCC hereby elects to contribute to the capital of HCC,
effective immediately prior to the Closing, the amount of such debt owed
by HCC to such stockholder as and to the extent indicated on Schedule
B-1 attached hereto. These capital contributions are reflected in the
number of shares of Company Common Stock in Schedule A which are to be
issued to such stockholders at the Closing. The amount of debt remaining
after these capital contributions (as set forth on Schedule B-1 hereto)
shall be renewed and extended and evidenced by new promissory notes to
be executed and delivered by HCC to the applicable stockholders, which
notes shall mature upon the expiration of five (5) years from the
Closing Date and bear interest at the prime rate published daily in the
Wall Street Journal plus 1% per annum. Such notes shall be guaranteed by
the Company.
(e) THISCO Debt. Each THISCO stockholder who previously made one
or more loans to THISCO hereby elects to contribute to the capital of
THISCO, effective immediately prior to the Closing, the amount of such
debt owed by THISCO to such stockholder as and to the extent indicated
on Schedule B-2 attached hereto. These capital contributions are
reflected in the number of shares of Company Common Stock in Schedule A
which are to be issued to such stockholders at the Closing. The amount
of debt remaining after these capital contributions (as set forth on
Schedule B-2 hereto) shall be renewed and extended and evidenced by new
promissory notes to be executed and delivered by THISCO to the
applicable stockholders, which notes shall mature upon the expiration of
five (5) years from the
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Closing Date and shall bear interest at the prime rate published daily
in the Wall Street Journal plus 1% per annum. Such notes shall be
guaranteed by the Company.
(f) Xxxx Accommodation. Xxxx Travel Group, a division of Xxxx
Elsevier Inc. ("Xxxx") agrees to forgive $75,000 of outstanding debt
owed by THISCO to Xxxx and the Company agrees to guaranty up to
$4,261,482 of the remaining outstanding debt owed by THISCO to Xxxx,
such guaranty to be in form and substance satisfactory to Xxxx and the
Company.
(g) Delivery of Company Guarantees. The Company shall execute and
deliver the guarantees contemplated within Subsections (d), (e) and (f)
of this Section 1.1.
(h) HCC Projected Volume Shares. In addition to the shares of
Company Common Stock to be issued as reflected on Schedule A, each HCC
stockholder, other than LNI, shall also receive the number of shares of
Company Common Stock specified on Schedule C attached hereto. In
connection therewith, the Company shall cause HCC to prepare and deliver
to each such HCC stockholder at the Closing a written confirmation of,
and each such HCC stockholder shall deliver to the Company at the
Closing a written acceptance of, the number of commissionable
reservation transactions that such holder projects it will process
through HCC from January 1, 1996 through December 31, 1996 ("Projected
Volume Confirmation"). The shares specified in Schedule C, referred to
herein as the "Projected Volume Shares," shall, in addition to any other
purchase rights set forth in the Stockholders Agreement, be subject to
purchase by the Company as follows: As soon as reasonably practicable
after December 31, 1996, the Company shall determine and certify to each
holder of Projected Volume Shares the actual number of commissionable
reservation transactions that were processed through HCC ("Actual
Transactions") by such holder from January 1, 1996 through December 31,
1996, compared to such holder's projected number of transactions
("Projected Transactions") set forth in its Projected Volume
Confirmation. With respect to each holder of Projected Volume Shares,
if such holder's Actual Transactions exceeds its Projected Transactions,
then the Projected Volume Shares held by such holder shall not be
subject to the purchase option contemplated by this paragraph. If the
Actual Transactions by any holder of Projected Volume Shares are less
than its Projected Transactions, then the Company may, at its option,
purchase, at a purchase price of $1.00 per share, the percentage of such
holder's Projected Volume Shares (rounded to the nearest whole share)
equal to the corresponding percentage by which such holder's Actual
Transactions were less than its Projected Transactions. For example, if
stockholder X's Actual Transactions for 1996 were 97.5% of its Projected
Transactions, then 2.5% of stockholder X's Projected Volume Shares would
be subject to purchase in accordance with the Stockholders Agreement.
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(i) Participant and User Agreements. As specified by Article V
of the Stockholders Agreement, each HCC stockholder and each THISCO
stockholder, as the case may be, shall execute and deliver the HCC
Participant Agreement and/or Ultra Switch User Agreement applicable to
it.
(j) LNI Stock Purchase Option. The Company and LNI shall
execute and deliver to one another the Stock Purchase Option dated the
Closing Date in substantially the form of Exhibit 2 to this Agreement
(the "LNI Option").
(k) Management Stock Purchase. At or within 30 days of the
Closing, management of the Company, HCC and/or THISCO shall purchase an
aggregate of 2,125 restricted shares of Common Stock, representing five
percent (5%) of the shares of the Company's Common Stock to be
outstanding as of the Closing (assuming the LNI Option were fully
exercised as of the Closing). The aggregate purchase price for these
shares shall be $570,874, which price reflects a discounted value based
on the restrictions imposed on such shares as outlined in Section 3 of
the Xxxxxx Xxxxxxxx report entitled "Pegasus Systems, Inc. Long-Term
Compensation Strategy" delivered to each of the parties hereto and such
shares are being purchased in exchange for management's rights to a five
percent (5%) preferred dividend as set forth in the Xxxxxx Xxxxxxxx
Report. These shares shall be in addition to any other shares which may
be reserved for the management of the Company under any future
compensation or ownership plan adopted by the Company.
1.2 Compliance with Section 351. The transactions contemplated by
this Agreement, to the extent subject thereto, are intended to qualify under
Section 351 of the Code.
1.3 Amendment or Waiver of Conflicting Provisions. Notwithstanding any
representation or warranty herein to the contrary, the parties to this
Agreement hereby acknowledge that the transactions contemplated by this
Agreement, including but not limited to the LNI Option, may conflict with or
violate certain provisions of the respective certificate of incorporation,
bylaws and stockholders agreement of HCC and THISCO or may now or hereafter
have an effect upon the capital structure of the Company. Accordingly, the
parties hereby agree to execute and deliver, or cause to be executed and
delivered, any required approvals, waivers, consents or amendments and to take,
or cause to be taken, any other action necessary to complete the transactions
contemplated herein in a timely fashion and in a manner which does not conflict
with or violate any documents or agreements binding upon or applicable to HCC,
THISCO and/or the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Stockholders, effective upon the Closing, as
follows:
(a) Organization. The Company is a corporation duly organized,
validly and in good standing under the laws of the State of Delaware and
has full corporate power and authority to conduct its business as it is
now being conducted.
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(b) Authority. The Company has all requisite corporate power and
authority to enter into and perform its obligations under this
Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby and to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement
and the Stockholders Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby, other than as provided or
contemplated herein. This Agreement constitutes, and the Stockholders
Agreement, when executed and delivered by the parties thereto will
constitute, valid and binding obligations of the Company, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency or other laws affecting
creditors generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(c) No Conflict. No filing with and no permit, authorization,
consent or approval of, any public body or authority is necessary for
the execution, delivery or performance by the Company of this Agreement
or the consummation by the Company of the transactions contemplated
hereby that has not already been made or obtained, which if not made or
obtained would have an adverse effect on its ability to consummate the
transactions contemplated hereby. Neither the execution, delivery or
performance by the Company of this Agreement nor the consummation by it
of the transactions contemplated hereby, nor compliance by it with any
of the provisions hereof will (i) conflict with or result in any breach
of any provision of its Certificate of Incorporation or Bylaws, (ii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any note, bond,
mortgage, license, agreement or other instrument or obligation to which
it is a party or by which it or any of its properties may be bound or
(iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to it or any of its properties.
(d) Title. The shares of Company Common Stock to be issued to the
Stockholders (as specified in Schedule A attached hereto), when issued,
will be duly authorized, legally and validly issued, fully paid and
non-assessable. The Company has the requisite legal right, power and
authority to issue such shares. The issuance of such shares and the
delivery of certificates representing such shares to such Stockholders
pursuant to the provisions of this Agreement will transfer to each of
such persons good and marketable title to the shares issuable to each of
such persons, free and clear of any pledge, lien, security interest,
encumbrance, claim or restriction on transferability, except for such
restrictions on resale as are set forth in
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this Agreement or the Stockholders Agreement, Certificate of
Incorporation or Bylaws and any applicable state and federal securities
laws.
2.2 Representations and Warranties of Certain Stockholders. Each of the
Stockholders, other than LNI, (as set forth on Schedule A attached hereto)
hereby severally represents and warrants to the Company and the other
Stockholders, effective upon the Closing, as follows:
(a) Authority. Such Stockholder has full legal right, power,
authority and capacity to enter into and perform this Agreement and the
Stockholders Agreement, and the consent, agreement or concurrence of no
other person or entity is required for such Stockholder to execute,
deliver and perform this Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby. This Agreement and the
Stockholders Agreement constitute the valid and binding obligations of
such Stockholder; enforceable against such Stockholders in accordance
with their terms, except as such enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) No Conflict. No filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for
the execution, delivery or performance by such Stockholder of this
Agreement or the Stockholders Agreement or for the consummation by such
Stockholder of the transactions contemplated hereby or thereby that has
not been made or obtained, which if not made or obtained would have an
adverse effect on the ability of such Stockholder to consummate the
transactions contemplated hereby or thereby. Neither the execution,
delivery or performance by such Stockholder of this Agreement or the
Stockholders Agreement nor the consummation by any such Stockholder of
the transactions contemplated hereby or thereby, nor compliance by such
Stockholder with any of the provisions hereof or thereof will (i) result
in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any fight of
termination, cancellation or acceleration) under, any note, bond,
mortgage, license, agreement or other instrument or obligation to which
such Stockholder is a party or (ii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to such Stockholder.
(c) Title. Such Stockholder has the requisite legal right,
power and authority to transfer such Stockholder's shares of Stock. The
delivery of certificates representing such Stock to the Company pursuant
to the provisions of this Agreement will transfer to the Company good
and marketable tide to all of the Stock owned by such Stockholder, free
and clear of any pledge, lien, security interest, encumbrance, claim or
restriction on transferability, except for such restrictions on resale
as are
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provided for under (i) the certificate of incorporation, bylaws and
stockholders agreement of HCC and THISCO, as the case may be, and (ii)
any applicable state and federal securities laws.
(d) Investment Representations. Such Stockholder acknowledges
that the Company has relied upon, and each such Stockholder makes,
effective upon the Closing, the following investment representations:
(i) Such Stockholder is acquiring the shares of Company
Common Stock for such Stockholder's own account and not with a
view to or for sale in connection with any distribution thereof
in violation of the Securities Act of 1933, as amended (the "1933
Act");
(ii) Such shares of Company Common Stock are "restricted
securities" as that term is defined in Rule 144 promulgated under
the 1933 Act and may not be sold, transferred, pledged,
distributed or otherwise disposed of except in compliance with
applicable federal and state securities laws and the Stockholders
Agreement;
(iii) Such Stockholder has such knowledge and experience
in business matters that such Stockholder is capable of
evaluating, and has evaluated, the merits and risks of the
proposed investment;
(iv) Such Stockholder is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D promulgated under the
1933 Act;
(v) Such Stockholder has been furnished all materials
relating to the Company, the Company Common Stock and the
proposed transaction which such Stockholder has requested and has
been afforded the opportunity to obtain additional information;
and
(vi) Such Stockholder has reviewed the following legend
and acknowledges, but does not represent or warrant, that the
Company will affix the following legend or a similar legend to
all certificates and other documents evidencing or representing
the Company Common Stock:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended,
or any state securities laws, and neither such shares nor
any interest therein may be sold, assigned, pledged,
transferred, hypothecated, encumbered or in any other
manner transferred or disposed of, or be subject to
execution, attachment or similar process, in whole or in
part, except in compliance therewith and with all other
applicable federal and state securities and
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other laws and regulations, and unless an opinion of
counsel or other evidence relating to compliance with such
laws, in form and substance satisfactory to the Company,
is delivered to the Company in advance of any such
transfer. Further, the shares represented by this
certificate are subject to the conditions, restrictions
and obligations specified in that certain Stockholders
Agreement dated 1995, and any amendments thereto (the
"Stockholders Agreement"), among the Company and certain
of its Stockholders, including conditions and restrictions
with respect to voting rights and powers, disposition,
stock ownership rights and prerequisites, transfer, the
composition of the Company's Board of Directors; stock
repurchase rights, and otherwise, and no transfer of the
shares represented by this certificate shall be valid or
effective unless and until such conditions and
restrictions have been complied with in all respects, in
the determination of the Company's Board of Directors. A
copy of the Stockholders Agreement is on file with the
Secretary of the Company. The holder of this certificate,
by acceptance of this certificate, agrees to be bound by
the provisions of the Stockholders Agreement and to
indemnify and hold the Company harmless against loss or
liability arising from the disposition of the shares
represented by this certificate in violation of such
provisions or in violation of any of the aforementioned
laws or regulations."
2.3 Representations and Warranties of LNI. LNI hereby represents and
warrants to the Company and the other Stockholders, effective upon the Closing,
as follows:
(a) Authority. LNI has full legal right, power, authority and
capacity to enter into and perform this Agreement, and the consent,
agreement or concurrence of no other person or entity is required for
LNI to execute, deliver and perform this Agreement and the transactions
contemplated hereby. This Agreement constitutes the valid and binding
obligation of LNI, enforceable against LNI in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency
or other laws affecting creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) No Conflict. No filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for
the execution, delivery or performance by LNI of this Agreement or for
the consummation by LNI of the transactions contemplated hereby that has
not been made or obtained, which if not made or obtained would have an
adverse effect on the ability of LNI to consummate the transactions
contemplated hereby. Neither the execution, delivery or performance by
LNI of this Agreement nor the consummation by LNI of the
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transactions contemplated hereby, nor compliance by LNI with any of the
provisions hereof or thereof will (i) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration) under, any note, bond, mortgage, license, agreement or
other instrument or obligation to which LNI is a party or (ii) violate
any order, writ, injunction, decree, statute, rule or regulation
applicable to LNI.
(c) Investment Representations. LNI acknowledges that the Company
has relied upon, and LNI makes, effective upon the Closing, the
following investment representations:
(i) LNI is acquiring the LNI Option for its own account
and not with a view to or for sale in connection with any
distribution thereof in violation of the 1933 Act;
(ii) The LNI Option may not be sold, transferred,
pledged, distributed or otherwise disposed of except in
compliance with its terms and with applicable federal and state
securities laws;
(iii) LNI has such knowledge and experience in business
matters that LNI is capable of evaluating, and has evaluated, the
merits and risks of The LNI Option;
(iv) LNI has been furnished all materials relating to
The Company, and the proposed transaction which LNI has requested
and has been afforded the opportunity to obtain additional
information.
ARTICLE III
MISCELLANEOUS
3.1 Notices. All notices, requests, approvals and other communications
provided for herein to any person named hereunder shall be in writing
(including wire, facsimile or similar writing) and shall be given, if in
writing and delivered personally, by telegram or facsimile, or sent by
registered mail, postage prepaid, to such person at his address or facsimile,
number set number as such person may hereafter specify by forth below or such
other address or notice to the other person.
If to the Stockholders, at the addresses set forth on Schedule A.
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If to the Company: Pegasus Systems, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President
Fax No.: (214) 52&5675
Each such notice shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this subsection
and the appropriate answer back is received or (ii) if given by other means,
when actually received at the address specified in this section; provided,
however, that a notice given other than during normal business hours or on a
business day at the place of receipt shall not be effective until the opening
of business on the next business day.
3.2 Further Assurances. Each party hereto agrees that, from time to
time, upon request, it will execute and deliver, or cause to be executed and
delivered, such other instruments and take such other action as such other
party reasonably may require to evidence more effectively the transactions
effected pursuant hereto.
3.3 Integration. This Agreement, and any other schedule, exhibit,
agreement, document or instrument attached hereto or referred to herein,
integrates all of the terms and conditions mentioned herein or incidental
hereto, and supersedes all other negotiations and prior writings in respect of
the subject matter hereof.
3.4 Governing Law. This Agreement shall be deemed to be a contract
made under the laws of the State of Delaware, and for all purposes shall be
governed by and construed in accordance with the laws of said State, without
regard to principles of conflicts of law.
3.5 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties in separate counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement
3.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that no party hereto shall assign any of
its rights or delegate any of its duties hereunder without the prior written
consent of the other party hereto. Neither this Agreement nor any other
agreement contemplated hereby shall be deemed to confer upon any person not a
party hereto or thereto any rights or remedies hereunder or thereunder.
3.7 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
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3.8 Waived Any term or provision of this Agreement may be waived in
writing (or the time for performance of any of the obligations or other acts of
the parties hereto may be extended) by any party.
3.9 Headings. All headings contained in this Agreement are intended
for convenience only and shall not control or affect the meaning, construction
or effect of this Agreement or any of the provisions thereof.
3.10 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall survive the
Closing.
[Balance of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement is executed by the parties on the
respective dates set forth below to be effective as of the date first above
written.
COMPANY:
PEGASUS SYSTEMS, INC.
By: /s/ XXXX X. XXXXX, III
------------------------------------
Its: President
-----------------------------------
Date: August 31, 1995
----------------------------------
---------------------------------------
ANASAZI, INC.
By: /s/ XXX XXXXXXXXXXX
------------------------------------
Its:
-----------------------------------
Date:
----------------------------------
---------------------------------------
BEST WESTERN INTERNATIONAL
By: /s/ XXXX XXXXXX
------------------------------------
Its: Sr. VP Worldwide Marketing
-----------------------------------
Date: July 18th 1995
----------------------------------
---------------------------------------
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CHOICE HOTELS INTERNATIONAL
By: Xxxxx X. Xxxxx
-------------------------------------
Its: Senior Vice President and Secretary
------------------------------------
Date: August 16, 1995
-----------------------------------
/s/ XXXXX X. XXXXX
----------------------------------------
TRUSTHOUSE FORTE CALIFORNIA INC.
By: Xxxxxxx X. Xxxxxx
------------------------------------
Its: Exec. V.P. Sales & Marketing
-----------------------------------
Date: July 20, 1995
----------------------------------
/s/ XXXXXXX X. XXXXXX
---------------------------------------
HILTON HOTELS CORPORATION
By: RoSat X. Xxxxx
-------------------------------------
Its: Sr. VP Mktg - HHC
------------------------------------
Date: 7/20/95
-----------------------------------
/s/ ROSAT X. XXXXX
----------------------------------------
HOSPITALITY FRANCHISE SYSTEMS, INC.
By: Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Its: Senior Vice President
------------------------------------
Date: 8/28/95
-----------------------------------
/s/ XXXXXXX X. XXXXXXXXX
----------------------------------------
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XXXX TRAVEL GROUP, A DIVISION OF XXXX
ELSEVIER INC.
By: Xxx Xxxxxx
------------------------------------
Its: COO
-----------------------------------
Date: July 21, 1995
----------------------------------
/s/ XXX XXXXXX
---------------------------------------
HYATT HOTELS CORPORATION
By: Xxxx X. Xxxxx
----------------------------------------------
Its: Ex. V. P.
---------------------------------------------
Date: 8/8/95
--------------------------------------------
/s/ XXXX X. XXXXX
-------------------------------------------------
INTER-CONTINENTAL HOTELS CORPORATION
By: Xxxx X. Travels
----------------------------------------------
Its: Senior Vice President- Property Management
--------------------------------------------
Date: 1st August 1995
--------------------------------------------
/s/ XXXX X. TRAVELS
-------------------------------------------------
ITT SHERATON CORPORATION
By: Xxxxxxx X. Xxxxxx
----------------------------------------------
Its: SVP
---------------------------------------------
Date: 7-28-95
--------------------------------------------
/s/ XXXXXXX X. XXXXXX
-------------------------------------------------
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LA QUINTA INNS, INC.
By: XX Xxxxxx Xx.
------------------------------------
Its: Sr. VP Accounting & Administration
-----------------------------------
Date: 7/19/95
----------------------------------
/s/ XX XXXXXX XX.
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LODGING NETWORK, INC.
By: Xxxxx X. Xxxxxxx
------------------------------------
Its: Vice President
-----------------------------------
Date: July 14, 1995
----------------------------------
/s/ XXXXX X. XXXXXXX
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MARRIOTT INTERNATIONAL, INC.
By: Xxxxx X. Xxxx
------------------------------------
Its: Vice President, Distribution Sales
-----------------------------------
Date: August 16, 1995
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/s/ XXXXX X. XXXX
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PROMUS HOTELS INC.
By: Xxx Xxxxxx
------------------------------------
Its: V.P. Reservations
-----------------------------------
Date: 7-18-95
----------------------------------
/s/ XXX XXXXXX
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UTELL INTERNATIONAL LTD.
By: Xxxx Xxxx
------------------------------------
Its: President
-----------------------------------
Date:
----------------------------------
/s/ XXXX XXXX
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WESTIN HOTELS COMPANY
By: Xxxx Xxxxxxx
------------------------------------
Its: Sr. V.P., Sales and Marketing
-----------------------------------
Date: July 25, 1995
----------------------------------
/s/ XXXX XXXXXXX
---------------------------------------
/s/ XXXX X. XXXXX, III
---------------------------------------
Xxxx X. Xxxxx, III
Date: August 31, 1995
----------------------------------
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SCHEDULE A
SHARES OF COMPANY
COMMON STOCK TO BE ISSUED
STOCKHOLDERS AND ADDRESSES TO HCC AND/OR THISCO STOCKHOLDERS
-------------------------- ---------------------------------
ANASAZI SERVICE CORPORATION 842
0000 X. Xxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Fax No.: (000) 000-0000
BEST WESTERN INTERNATIONAL 2,726
0000 X. 00xx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
CHOICE HOTELS INTERNATIONAL 1,281
0000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
FORTE HOTELS 1,618
0000 Xxxxxxxxxx Xxxxx
Xx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
HILTON HOTELS CORPORATION 1,281
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Ing
Fax No.: (000) 000-0000
HOSPITALITY FRANCHISE SYSTEMS, INC. 3,101
0000 X. Xxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
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SHARES OF COMPANY
COMMON STOCK TO BE ISSUED
STOCKHOLDERS AND ADDRESSES TO HCC AND/OR THISCO STOCKHOLDERS
-------------------------- ---------------------------------
XXXX TRAVEL GROUP, A DIVISION OF 4,821
XXXX ELSEVIER INC
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
HYATT HOTELS CORPORATION 2,725
000 X. Xxxxxxx Xxxxxx, #00
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
INTER-CONTINENTAL HOTELS CORPORATION 2,185
Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxxx Xxxxxxx
Fax No.: 000 00 00 000 0000
ITT SHERATON CORPORATION 2,307
Sixty Xxxxx Xxxxxx
Xxxxx Xxxxxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
LA QUINTA INNS, INC. 2,311
000 X. Xxxxx Xx.
X.X. Xxx 0000
Xxx Xxxxxxx, XX 00000
Attention: X.X. Xxxxxxx, Xx.
Fax No.: (000) 000-0000
LODGING NETWORK, INC. *
0000 Xxxxxxx Xxxxxx, LB 00
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax No.: (000) 000-0000
-18-
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SHARES OF COMPANY
COMMON STOCK TO BE ISSUED
STOCKHOLDERS AND ADDRESSES TO HCC AND/OR THISCO STOCKHOLDERS
-------------------------- ---------------------------------
MARRIOTT INTERNATIONAL, INC. 1,281
One Marriott Drive, Dept. 939.07
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx
Fax No.: (000) 000-0000
PROMUS HOTELS INC. 2,955
0000 Xxxxxxx Xxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
UTELL INTERNATIONAL LTD. 844
2 Kew Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxx XX0 0XX
Attention: Xxxx Xxxx
Fax No.: 000 00 00 000 0000
WESTIN HOTELS & RESORTS 2,265
0000 0xx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax No.: (000) 000-0000
XXXX X. XXXXX, III 884
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
------
Total Schedule A Shares 33,427
Total Schedule C Shares 3,583
Total Management Shares 2,125
*Shares subject to LNI Option 3,365
------
MAXIMUM TOTAL SHARES SUBJECT
TO ISSUANCE PURSUANT TO
CONTRIBUTION AND RESTRUCTURING
AGREEMENT 42,500
======
-19-
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SCHEDULE B-1
DEBT
HCC CONTRIBUTED HCC
TOTAL TO EQUITY REMAINING
P&I* CAPITAL DEBT
--- ------- ----
BEST WESTERN INTERNATIONAL $ 94,009.01 $ 37,500.00 $ 56,509.01
HYATT HOTELS CORPORATION 93,325.61 37,500.00 55,825.61
INTER-CONTINENTAL HOTELS 93,910.31 37,500.00 56,410.31
ITT SHERATON CORPORATION 93,666.46 37,500.00 56,166.46
IA QUINTA INNS, INC. 92,661.69 37,500.00 55,161.69
PROMUS HOTELS INC. 72,697.27 37,500.00 35,197.27
HOSPITALITY FRANCHISE
SYSTEMS, INC 93,846.44 37,500.00 56,346.44
UTELL INTERNATIONAL 93,695.48 37,500.00 56,195.48
WESTIN HOTELS & RESORTS 93,637.42 37,500.00 56,137.42
----------- ----------- -----------
TOTAL $821,449.69 $337,500.00 $483,949.69
*HCC TOTAL P&I INCLUDES INTEREST THROUGH JUNE 30, 1995.
INTEREST WILL BE ACCRUED THROUGH CLOSING DATE OF PEGASUS TRANSACTION.
-20-
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SCHEDULE B-2
DEBT
THISCO CONTRIBUTED THISCO
TOTAL TO EQUITY REMAINING
P&I* CAPITAL DEBT
--- ------- ----
BEST WESTERN INTERNATIONAL $ 90,994.59 $ 37,500.00 $ 53,494.59
CHOICE HOTELS INTERNATIONAL 91,118.76 37,500.00 53,618.76
FORTE HOTELS 90,554.46 37,500.00 53,054.46
HILTON HOTELS CORPORATION 81,168.91 37,500.00 43,668.91
HYATT HOTELS CORPORATION 77,191.71 37,500.00 39,691.71
INTER-CONTINENTAL HOTELS 82,306.98 37,500.00 44,806.98
ITT SHERATON CORPORATION 90,770.15 37,500.00 53,270.15
LA QUINTA INNS, INC. 82,900.62 37,500.00 45,400.62
MARRIOTT INTERNATIONAL, INC. 69,338.49 37,500.00 31,838.49
PROMUS HOTELS INC. 91,207.39 37,500.00 53,707.39
HOSPITALITY FRANCHISE
SYSTEMS, INC. 54,931.14 37,500.00 17,432.14
WESTIN HOTELS & RESORTS 89,703.55 37,500.00 52.203.55
----------- ----------- -----------
TOTAL $992,187.75 $450,000.00 $542,187.75
*THISCO TOTAL P&I INCLUDES INTEREST THROUGH JUNE 30, 1995.
INTEREST WILL BE ACCRUED THROUGH CLOSING DATE OF PEGASUS TRANSACTION.
-21-
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SCHEDULE C
NUMBER OF PEGASUS
-----------------
HCC STOCKHOLDER SHARES SUBJECT TO REPURCHASE
--------------- ----------------------------
Anasazi Service Corporation 87
Best Western International 544
Forte Hotels 303
Hospitality Franchise Systems, Inc. 703
Hyatt Hotels Corporation 455
Inter-Continental Hotels Corporation 165
ITT Sheraton Corporation 215
La Quinta Inns, Inc. 142
Promus Hotels Inc. 769
Utell International Ltd. 78
Westin Hotels & Resorts 122
-----
Total 3,583
-22-
23
EXHIBIT 1
Stockholders Agreement
-23-
24
CONFIDENTIAL
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement"), dated effective as of
July __, 1995, among Pegasus Systems, Inc., a Delaware corporation (the
"Company"), and all of the holders of Common Stock, $.01 par value, of the
Company (collectively referred to herein as the "Stock") set forth on Schedule
A hereto. The holders of Stock are collectively referred to as the
"Stockholders."
WITNESSETH:
WHEREAS, the Company is a corporation duly organized and validly
existing under the laws of the State of Delaware with authorized capital of One
Hundred Thousand (100,000) shares of Common Stock and Ten Thousand (10,000)
shares of Preferred Stock; and
WHEREAS, the Company and the Stockholders wish to enter into an
agreement respecting future sales of shares of the Stock, certain limitations
on the transfer of shares of the Stock, the election and voting power of
directors, and certain other matters;
NOW, THEREFORE, in consideration of the promises and mutual covenants,
conditions and agreements herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:
ARTICLE I
RESTRICTIONS AND OBLIGATIONS RELATING TO
DISPOSITION AND OWNERSHIP OF STOCK
Except as permitted below, no Stockholder shall sell, assign, devise,
bequeath, transfer, give, pledge, encumber, hypothecate, or in any manner
dispose of, or part with, any or all of its right, title or interest in any
share or shares of Stock of the Company now or at any time hereafter held by it
(any such action being referred to herein as a "Transfer"), or attempt to make
such a Transfer without the prior written consent of the Company (which consent
may be withheld by the Company in its sole discretion). A merger, sale of all
or substantially all assets or other business combination by a Stockholder
shall not be considered a "Transfer" hereunder. The Company, by its execution
of this Agreement, agrees that it will not cause or permit the Transfer of any
shares of Stock held by the Stockholders to be made on its books except in
accordance with the terms of this Agreement.
Notwithstanding the foregoing, any Stockholder may freely Transfer its
share of Stock to any one (1) of its affiliates provided that, such
Stockholder, with its affiliates, will not on
EXHIBIT 1
25
account of such Transfer beneficially hold more than twenty-five percent (25%)
of the issued Stock of the Company and provided further that such affiliate
agrees in writing to be bound by the terms of this Agreement. The term
"affiliate" as used in this Agreement shall have the meaning ascribed to it
under Rule 12b-2, promulgated under the Securities Exchange Act of 1934, as in
effect on June 1, 1995.
Any Transfer or attempted Transfer by any Stockholder other than as
permitted by this Agreement shall be void ab initio and be deemed to be a
breach of this Agreement.
Within three years of the date of the Corporation's Certificate of
Incorporation, no Stockholder, together with its affiliates, may at any time be
the beneficial holder of more than twenty-five percent (25%) of the issued
Stock of the Company.
ARTICLE II
RIGHT OF FIRST REFUSAL
Subject to the provisions of Article I, should any Stockholder receive a
bona fide offer from an unaffiliated party or wish to enter into any agreement
relating to the Transfer of any or all of the Stock held by such Stockholder,
the Company shall have a right of first refusal to purchase the Stock which is
the subject of such bona fide offer or agreement (the "Subject Stock").
Pursuant to this right of first refusal, the Stockholder receiving the offer or
wishing to enter into any such Agreement shall notify the Board of Directors of
the Company, in writing, of the offer or agreement and all of the terms
thereof, including, without limitation, the name and address of the proposed
purchaser, the exact number of shares that are the subject of the proposed
Transfer, the offered purchase price or other consideration, any terms and
conditions of payment, and whether the selling Stockholder intends to accept
the offer on the offered terms. If the Stockholder receiving the offer or
wishing to enter into any such agreement has decided to accept the offer
subject to the provisions hereof, the Board of Directors of the Company, within
thirty (30) days after such notice of the proposed sale by such Stockholder,
shall notify the selling Stockholder whether the Company wishes to purchase all
of the Subject Stock on substantially the same terms and conditions as those
set forth in the notice; and if the Company does wish to so purchase all such
shares, such Stockholder shall sell such shares as the Company desires to the
Company, on a timely basis, and shall cooperate in all such respects. If the
Board of Directors of the Company declines to undertake to so purchase all of
the Subject Stock, the Stockholder receiving the offer or wishing to enter into
any such agreement may proceed to sell such Subject Stock on the same terms and
conditions as proposed in the notice. If no such sale of the Subject Stock is
consummated within a ninety (90) day period following the expiration of the
thirty (30) day period during which the Company may accept the offer to
undertake the transaction, the sale of the Subject Stock shall again become
subject to this Article II.
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Notwithstanding the foregoing, any Stockholder may Transfer shares of
Stock pursuant to the second paragraph of Article I hereof without such
Transfer being subject to the above right of first refusal.
ARTICLE III
BUY BACK OF PROJECTED VOLUME SHARES
(a) Attached hereto as Schedule B is a list of certain shares of
Stock, referred to herein as the "Projected Volume Shares", and the holders
thereof. In addition to any other purchase rights set forth in this Agreement,
the Projected Volume Shares held by such holders shall be subject to purchase
by the Company as follows: As soon as reasonably practicable after December 31,
1996, the Company shall determine and certify to each holder the actual number
of commissionable reservation transactions that were processed through The
Hotel Clearing Corporation ("HCC") ("Actual Transactions") by such holder of
the Projected Volume Shares from January 1, 1996 through December 31, 1996,
compared to such holder's projected number of transactions ("Projected
Transactions") set forth in the Projected Volume Confirmation (herein so
called) delivered by such holder to the Company and accepted as of the date of
this Agreement. With respect to each holder of Projected Volume Shares, if such
holder's Actual Transactions equal or exceed its Projected Transactions, then
the Projected Volume Shares held by such person shall not be subject to the
purchase option provided for in this paragraph. If the Actual Transactions by
any holder of Projected Volume Shares are less than its Projected Transactions,
then the Company may, at its option, purchase, at a purchase price of one
dollar ($1.00) per share, the percentage of such holder's Projected Volume
Shares (rounded to the nearest whole share) equal to the corresponding
percentage by which such holder's Actual Transactions were less than its
Projected Transactions. If this purchase option is exercised, the holder of any
Projected Volume Shares subject thereto shall be required to, and shall, sell
the required percentage of its Projected Volume Shares (rounded to the nearest
whole share) to the Company and shall cooperate with the Company in all
respects. The Company shall have one hundred and eighty (180) days after
delivery of the required certification regarding Actual Transactions to
exercise this purchase right by notifying any affected Stockholder of such
exercise and tendering payment of the required purchase price to the affected
Stockholder(s). Each such affected Stockholder (i) shall cooperate in all
respects with such purchase and (ii) hereby irrevocably appoints the Company as
its agent and attorney-in-fact to transfer such shares as provided above and to
do all things necessary or appropriate to accomplish such transfer.
ARTICLE IV
DIRECTORS
(a) Each holder of record of at least one and one-half percent (1.5%)
of the shares of the Company's issued and outstanding Stock entitled to vote
shall be entitled to
3
27
designate and nominate one (1) person for election to the Company's Board of
Directors by the Stockholders. For such calculation, the percentage of the
shares of the Company's issued and outstanding Stock held by any Stockholder
shall be inclusive of the shares held by all affiliates of such Stockholder;
provided, however that Xxxx Travel Group, a division of Xxxx Elsevier Inc.
("Xxxx") and Utell International Ltd. ("Utell") shall each be entitled to
designate and nominate one (1) person for election to the Board notwithstanding
that they are affiliates of each other, as long as each of Xxxx and Utell hold
at least 1.5% of the shares of Stock entitled to vote in the election of
directors. The person so nominated must be an officer or employee of such
holder of such share of Stock designating or nominating such person. As
required by the Bylaws of the Company, in the event that management is not
represented by at least one member of the Board of Directors through such
director's ownership of at least one and one-half percent (1.5%) of the shares
of the capital stock, the number of directors shall be increased by one (1).
The President of the Company, with the advice of the Chairman of the Board,
shall designate and nominate one (1) person for election to the Company's Board
of Directors as the representative of the management of the Company. All
nominations for directors shall be submitted to the Board of Directors at such
time and in such manner as is determined by the Board of Directors,
(b) All holders of Stock entitled to vote shall vote for, and shall
take all necessary steps to accomplish, the election of each of the respective
person(s) appropriately designated and nominated by a holder of Stock and/or by
the management of the Company for a seat on the Company's Board of Directors in
accordance with foregoing paragraph, and shall cooperate and act in accordance
therewith, in a timely manner and in good faith, to the maximum extent
possible.
(c) If a Stockholder or Stockholders wish(es) to remove or proposes
the removal of the director(s) that it or they had designated or nominated to
the Board of Directors, all of the Stockholders entitled to vote shall vote
for, and shall take all necessary steps to accomplish, the removal of such
director. Except in cases where a director is being removed for cause, each
Stockholder entitled to vote hereby agrees to refrain from voting in favor of
the removal of any director who had been elected by the Stockholders, unless
the Stockholder that had designated and nominated such director also votes in
favor of such removal.
(d) If any director is removed from office, resigns, dies or
otherwise leaves the Board of Directors (except as provided in the following
paragraphs, the Stockholder or Stockholders that had designated or nominated
such director in accordance with paragraph (a) of this Article IV shall be
entitled to designate and nominate a new director to fill the vacancy so
created in the Company's Board of Directors, and the other Stockholders
entitled to vote shall act in the manner provided in paragraph (b) of this
Article IV.
(e) If the Company purchases the Stock of any Stockholder entitled to
vote, or if a Stockholder surrenders its Stock to the Company as provided for
in Article XI(b) hereof, such Stockholder's representative on the Board of
Directors shall immediately be terminated as a director and, as provided in the
Bylaws of the Company, the seat on the Board of Directors previously held by
such director shall be eliminated, reducing the total number of directors by
one and creating no vacancy on the Board of Directors by reason of such
termination.
4
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ARTICLE V
UTILIZATION OF SUBSIDIARY COMPANIES' SERVICES
Each Stockholder listed on Schedule A hereto shall execute the HCC
Participant Agreement and/or UltraSwitch User Agreement listed next to its name
on Schedule A and comply with all obligations set forth in each such agreement.
ARTICLE VI
CONFIDENTIAL INFORMATION; RESTRICTIONS ON THE COMPANY
The Company shall, and shall cause its officers, directors, employees,
consultants and agents (collectively, "Company Representatives") to, keep
secret and retain in strictest confidence any and all confidential matters
relating to the business of any Stockholder or affiliate thereof (including,
but not limited to, all confidential data provided by the Stockholders to the
Company) that are (i) not otherwise in the public domain, (ii) not otherwise in
the rightful possession of the Company from third parties having no obligation
of confidentiality to a Stockholder, (iii) not required under compulsion of law
to be disclosed by the Company or Company Representatives (through oral
question, interrogatory, subpoena, civil investigative demands, or similar
process), or (iv) not edited, masked, aggregated, summarized, compiled or
otherwise modified in such a way as to delete or obscure references or data
directly identifying any Stockholder, and shall not disclose them, and shall
cause the Company Representatives not to disclose them, to anyone outside such
Stockholder, such Stockholder's affiliates, the Company or Company
Representatives; nor may the Company or any Company Representatives exploit
such confidential matters for its or their respective benefit or the benefit of
other relationships with customers of the Company; and all such confidential
information that is proprietary in nature shall remain the sole property of the
Stockholder that furnished such information to the Company. The confidentiality
obligations hereunder shall continue in perpetuity. For purposes of this
Article VI, information furnished by any Stockholder to the Company shall be
deemed to be confidential only if, in addition to the above, the information in
question is clearly designated as being confidential by the Stockholder or
other person furnishing such information to the Company.
If the Company or any Company Representative breaches, or threatens to
commit a breach of, any of the provisions of this Article VI, the Stockholder
furnishing such confidential information shall have the right and remedy to
have this Article VI specifically enforced by any court having jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to such Stockholder and that money damages will not
provide an adequate remedy to such Stockholder. Nothing in this Article VI
shall be construed to limit the right of any such Stockholder to collect money
damages in the event of a breach of this Article VI.
5
29
Notwithstanding the above, the provisions of this Article VI shall not
apply in the case of any information furnished by any Stockholder (or affiliate
thereof who has entered into an agreement with the Company specifically
providing that this Article VI's provisions shall not apply to the extent they
are inconsistent with such other agreement.
ARTICLE VII
CONFIDENTIAL INFORMATION; RESTRICTIONS ON STOCKHOLDERS
Each Stockholder and its affiliates shall, and each Stockholder shall
cause its and its affiliates' officers, directors, stockholders, employees,
consultants and agents (collectively, "Stockholder Representatives") to, keep
secret and retain in strictest confidence any and all confidential matters
relating to the business of the Company and any other Stockholder or affiliate
thereof (including, but not limited to, all information provided by the other
Stockholders to the Company, the technology and design of the clearinghouse
service system developed by the Company and, to the extent that it is released
to them by the Company, all data and information generated by the Company's
clearinghouse service system) that are (i) not otherwise in the public domain,
(ii) not otherwise in the rightful possession of such Stockholder (or
affiliate) from third parties having no obligation of confidentiality to a
Stockholder or the Company, or (iii) not required under compulsion of law to be
disclosed by such Stockholder, its affiliates or Stockholder Representatives
(through oral question, interrogatory, subpoena, civil investigative demands,
or similar process), and shall not disclose them, and shall cause the
Stockholder Representatives not to disclose them, to anyone outside such
Stockholder, such affiliates, or the Company and its agents, except as
otherwise determined by the Board of Directors, nor may a Stockholder or its
affiliates or any Stockholder Representative exploit such confidential matters
for its or their respective benefit or the benefit of other relationships with
customers of such Stockholder and its affiliates, except as otherwise
determined by the Board of Directors. The confidentiality obligations hereunder
shall continue in perpetuity. For purposes of this Article VII, information
furnished by any Stockholder to the Company shall be deemed to be confidential
only if, in addition to the above, the information in question is clearly
designated as being confidential by the Stockholder or other person furnishing
such information to the Company.
If a Stockholder or any of its affiliates or Stockholder Representative
breaches, or threatens to commit a breach of, any of the provisions of this
Article VII, any of the other Stockholders and/or the Company shall have the
right and remedy to have this Article VII specifically enforced by any court
having jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to such other Stockholders and
the Company and that money damages will not provide an adequate remedy to such
other Stockholders or the Company. Nothing in this Article VII shall be
construed to limit the right of any Stockholder or the Company to collect money
damages in the event of a breach of this Article VII.
6
30
Notwithstanding the above, the provisions of this Article VII shall not
apply in the case of any information furnished by any Stockholder (or affiliate
thereof) who has entered into an agreement with the Company specifically
providing that this Article VII's provision shall not apply to the extent they
are inconsistent with such other agreement.
ARTICLE VIII
LEGENDS ON STOCK CERTIFICATES
The certificates for all shares of the Stock of the Company are
concurrently with the issuance thereof to be endorsed with the legends in
substantially the form below:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
laws, and neither such shares nor any interest therein may be sold,
assigned, pledged, transferred, hypothecated, encumbered or in any other
manner transferred or disposed of, or be subject to execution,
attachment or similar process, in whole or in part, except in compliance
therewith and with all other applicable federal and state securities and
other laws and regulations, and unless an opinion of counsel or other
evidence relating to compliance with such laws, in form and substance
satisfactory to the Company, is delivered to the Company in advance of
any such transfer. Further, the shares represented by this certificate
are subject to the conditions, restrictions and obligations specified in
that certain Stockholders Agreement dated __,1995, and any amendments
thereto (the "Stockholders Agreement"), among the Company and certain of
its Stockholders, including conditions and restrictions with respect to
voting rights and powers, disposition, stock ownership rights and
prerequisites, transfer, the composition of the Company's Board of
Directors, stock repurchase rights, and otherwise, and no transfer of
the shares represented by this certificate shall be valid or effective
unless and until such conditions and restrictions have been complied
with in all respects, in the determination of the Company's Board of
Directors. A copy of the Stockholders Agreement is on file with the
Secretary of the Company. The holder of this certificate, by acceptance
of this certificate, agrees to be bound by the provisions of the
Stockholders Agreement and to indemnify and hold the Company harmless
against loss or liability arising from the disposition of the shares
represented by this certificate in violation of such provisions or in
violation of any of the aforementioned laws or regulations."
Said certificates, and all certificates representing shares of the Stock of the
Company at any time hereafter issued or transferred, shall include similar
endorsements. Any transfer of any shares of Stock of the Company shall be made
upon the books of the Company only in accordance with this provision.
7
31
ARTICLE IX
NOTICES
All notices, requests, consents, payments and other communications
contemplated hereby shall be in writing and (a) personally delivered, (b)
deposited in the United States mail, first-class, registered or certified mail,
return receipt requested, with postage prepaid, or (c) sent by overnight
courier service (for next business day delivery), shipping prepaid, as follows:
If to the Stockholders, at the addresses set forth on Schedule A.
If to the Company:
Pegasus Systems, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xx 00000
Attention: President
or such persons or addresses as any party may request by notice duly given
hereunder. Except as otherwise specified herein, notices shall be deemed given
and received at the time of personal delivery or, if sent by U.S. mail, three
(3) business days after mailing, or, if sent by overnight courier, one (1)
business day after such sending. The foregoing notice provision shall apply
equally with respect to any process which either party may desire to serve on
the other party, pursuant to judicial process or otherwise, it being expressly
understood and agreed that such mode of service shall be in addition to and not
in derogation of any other valid forms of service provided by law.
ARTICLE X
ADDITIONAL STOCKHOLDERS
No persons or entity other than those listed on Schedule A may be a
stockholder of the Company's Stock unless and until such person or entity
agrees in writing as a condition to their ownership of the Stock to become a
party to this Agreement, by executing and delivering to the Company a letter
substantially in the following form, in form and substance satisfactory to the
Company:
8
32
"To Pegasus Systems, Inc.:
The undersigned hereby agrees to become a party to the
Stockholders Agreement dated as of, 1995, among Pegasus Systems,
Inc. and the stockholders named in such agreement, and agrees to
be bound by all of the terms and provisions thereof in all
respects. This election shall be binding upon the heirs,
executors, administrators, successors, and assigns of the
undersigned.
Very truly yours,
------------------------------
Dated: "
-----------------
ARTICLE XI
TERMINATION
(a) Except as otherwise provided in Articles VI and VII hereof, all
provisions in this Agreement shall continue until the earliest to occur of the
following: (i) such time as the parties and the Company mutually agree in
writing to terminate this Agreement; (ii) such time as the Board of Directors
shall determine in connection with a public offering, if any, of the Company's
securities; or (ii) ten (10) years from the date hereof unless this Agreement
is extended as provided in Article XIX hereof.
(b) Notwithstanding any other provision hereof except for the
provisions of Articles VI and VII, any Stockholder may at any time surrender
(for no consideration) to the Company all of its shares of the Company's Stock,
and in such event, such Stockholder shall no longer be deemed to be a
Stockholder and shall have no further obligations hereunder, except to abide by
the perpetual confidentiality provisions of Articles VI and VII hereof.
ARTICLE XII
BENEFIT, USE OF TERMS
This Agreement and each of its provisions, whether so expressed or not,
shall be binding upon the parties and their heirs, executors, administrators,
successors and assigns. This Agreement shall inure to the benefit of each of
the foregoing but rights and interests under this Agreement shall be assignable
only in accordance with this Agreement and to the extent expressly permitted
herein.
9
33
Terms used in the singular shall be read in the plural, and vice versa,
and terms used in the masculine gender shall be read in the feminine or neuter
gender, when the context so requires. The term "person" as used herein refers
to a natural person, a corporation, or any other entity or association, as the
context requires.
ARTICLE XIII
APPLICABLE LAW
This Agreement shall be governed by, and construed according to, the
laws of the State of Delaware, without giving effect to the choice of law
principles thereof.
ARTICLE XIV
ARBITRATION
Any controversy or claim arising out of, or relating to, this Agreement,
or the breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by a single Arbitrator may be entered in any
Court having jurisdiction thereof. The place of arbitration shall be Dallas
County, Texas or as otherwise agreed by the parties.
ARTICLE XV
SEVERABILITY
The provisions of this Agreement shall be deemed severable, and if any
part of any provision is held to be illegal, void, voidable, invalid, non-
binding or unenforceable in its entirety or partially or as to any party, for
any reason, such provision may be changed, consistent with the intent of the
parties hereto, to the extent reasonably necessary to make the provision, as so
changed, legal, valid, binding and enforceable. If any provision of this
Agreement is held to be legal, void, voidable, invalid, non-binding or
unenforceable in its entirely or partially or as to any party, for any reason,
and if such provision cannot be changed consistent with intent of the parties
hereto to make it fully legal, valid, binding and enforceable, then such
provisions shall be stricken from this Agreement, and the remaining provisions
of this Agreement shall not in any way be affected or impaired, but shall
remain in full force and effect.
ARTICLE XVI
NO PARTNERSHIP
Notwithstanding anything to the contrary in this Agreement, the parties
agree that nothing contained or provided for herein creates a partnership or
joint venture.
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34
ARTICLE XVII
ENTIRE AGREEMENT
This Agreement and all Schedules hereto set forth the entire
understanding of the parties with respect to the subject matter hereof, and
incorporate and merges any and all previous communications, understandings,
oral or written.
ARTICLE XVIII
COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement binding on all of the parties, notwithstanding that
all parties are not signatories to the original or the same counterpart. It is
expressly contemplated that such counterparts may be executed at different
times and from time to time; each party shall become bound by this Agreement
immediately upon affixing its signature hereto, independently of the signature
of any other party.
ARTICLE XIX
RENEWAL OF VOTING AGREEMENT
The parties acknowledge and understand that the Stockholders' covenants
contained in Article IV hereof to vote their stock in accordance with the
provisions thereof are permitted to remain in effect only for a ten (10) year
period, unless renewed, as provided herein. Therefore, the Company may, prior
to such expiration and the expiration of any renewed terms, request that all
Stockholders agree to an additional ten (10) year extension of such voting
provisions. Each Stockholder agrees to use its best efforts to accomplish each
such extension.
ARTICLE XX
REPRESENTATIONS AND WARRANTIES
Each Stockholder hereby represents and warrants to the other parties
hereto, as of the date on which it becomes a party hereto, and as of any other
dates on which such Stockholder contributes additional capital to, makes a loan
to, or purchases securities from, the Company (or agrees to do any of the
foregoing), as follows:
(a) The Stockholder has the full and entire right, power, and authority
and has taken all necessary action, including without limitation requisite
approval of its board of Directors, required to authorize (i) the execution and
delivery of this Agreement; (ii) the
11
35
receipt of a stock certificate for the number and class of shares owned by such
Stockholder; (iii) the tendering of full payment of the purchase price for such
stock; and (iv) the performances of all other acts and obligations required in
order to carry out in full this Agreement. The Stockholder will not, by
becoming a stockholder of the Company, by entering into this Agreement or by
taking any action contemplated hereunder, default under, breach or otherwise be
in conflict with any other agreement, document or instrument to which the
Stockholder is subject or by which the Stockholder is bound.
(b) The Stockholder is acquiring the shares of the Company's stock
(the "Share(s)") for its own account for investment, and not with a view to, or
for offering it for sale in connection with, the transfer, distribution or
resale thereof, and agrees not to sell, transfer, assign, pledge, hypothecate,
or otherwise dispose or attempt to dispose of its Share(s) (i) unless the
Shares represented thereby has been registered under the Securities Act of
1933, as amended (the "Act"), and applicable state securities laws or, in the
opinion of counsel acceptable to the Company and its counsel, an exemption from
the registration requirements of the Act and such laws is available, or (ii) in
any manner which would either result in such Stockholder being deemed under the
Act to be an underwriter of such Share(s) within the meaning of the Act or
result in the loss to the Company of its exemption from registration under the
Act relating to the issuance of such Share(s) to the Stockholder or to any
other person. The Stockholder acknowledges that registration of Share(s) for
resale under the Act and such other laws is unlikely at any time in the future.
(c) The Stockholder has a sufficient degree of sophistication,
knowledge and experience in financial affairs to understand and evaluate the
merits and risks associated with investment in the Share(s) and in the Company,
and (i) its overall commitment to investments that are not readily marketable
is not disproportionate to its net worth and if so investment in the Share(s)
will not cause such overall commitment to become excessive; (ii) it has
adequate net worth and means of providing for any current needs and
contingencies such that it is able to sustain a complete loss of its investment
in the Share(s), and it has no need for liquidity in this investment; and (iii)
it has evaluated the risk of investing in Share(s) and the Company.
(d) The Stockholder recognizes that investment in the Share(s) and
the Company involves certain risks, and it has taken full cognizance of and
understands all of the risk factors related to an investment in the Share(s).
(e) The Stockholder has been provided with ample opportunities to
discuss and raise questions with the Company and its founders, promoters,
officers and directors, concerning the detailed operations and business plans
of the Company.
(f) The Stockholder shall indemnify and hold the Company harmless
from and against any and all damage (including, without limitation, any
liability, cost, or expense, including, without limitation, attorney's fees and
disbursements) arising out of any breach of any of the representations,
warranties, covenants, or provisions contained in this Agreement.
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36
ARTICLE XXI
POWER OF DECISIONS
It is understood and agreed that, except as otherwise provided herein or
in the Company's Certificate of Incorporation or Bylaws, as amended from time
to time, all actions and decisions which the Company may or must take or make
hereunder shall be taken or made by the Company's Board of Directors acting in
accordance with the quorum and voting power provisions set forth in the
Company's Certificate of Incorporation and Bylaws, as amended from time to
time.
ARTICLE XXII
AMENDMENTS
This Agreement may be amended, modified, or repealed, or a new Agreement
may be adopted, only by, in addition to all applicable requirements of law, a
writing executed and delivered by the Company and by Stockholders holding of
record at least two-thirds (2/3) of the then outstanding shares of Stock;
provided, however, that no provision of this Agreement may be amended,
modified, repealed or replaced without the Company and all holders of all of
the then outstanding shares of Stock agreeing in writing thereto, if such
amendment, modification, repeal or replacement would in any manner increase or
expand the Company's or any other person's or entity's ability to force, compel
or require any holder of shares of Stock to sell any such shares of Stock to
the Company or to any other person or entity under any circumstance not
otherwise permitted by this Agreement, the Bylaws or the Certificate of
Incorporation.
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37
IN WITNESS WHEREOF, this Agreement is executed by the parties on the
respective dates set forth below to be effective as of the date first above
written.
COMPANY:
PEGASUS SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Its: President
----------------------------
Date:
---------------------------
--------------------------------
ANASAZI, INC.
By: Xxx Xxxxxxxxxxx
-----------------------------
Its:
----------------------------
Date:
---------------------------
/s/ XXX XXXXXXXXXXX
--------------------------------
BEST WESTERN INTERNATIONAL
By: Xxxxxxx Xxxxxx
-----------------------------
Its: Sr. VP Worldwide Marketing
----------------------------
Date:
---------------------------
/s/ XXXXXXX XXXXXX
--------------------------------
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38
CHOICE HOTELS INTERNATIONAL
By: Xxxxx X. Xxxxxx
-----------------------------
Its:
----------------------------
Date:
---------------------------
/s/ XXXXX X. XXXXXX
--------------------------------
FORTE HOTELS
By: Xxxxxxx X. Xxxxxx
-----------------------------
Its: Executive VP Sales & Marketing
----------------------------
Date: July 20, 1995
---------------------------
/s/ XXXXXXX X. XXXXXX
--------------------------------
HILTON HOTELS CORPORATION
By: Xxxxxx X. Xxxxx
-----------------------------
Its: Sr. VP Marketing
----------------------------
Date:
---------------------------
/s/ XXXXXX X. XXXXX
--------------------------------
HOSPITALITY FRANCHISE SYSTEMS,
INC.
By: Xxxxxxx X. Xxxxxxxxx
-----------------------------
Its: Senior Vice President
----------------------------
Date: 8/28/95
---------------------------
/s/ XXXXXXX X. XXXXXXXXX
--------------------------------
15
39
XXXX TRAVEL GROUP, A DIVISION OF
XXXX ELSEVIER INC.
By: Xxx Xxxxxx
-----------------------------
Its: COO
----------------------------
Date: 7/21/95
---------------------------
/s/ XXX XXXXXX
--------------------------------
HYATT HOTELS CORPORATION
By: Xxxx X. Xxxxx
-----------------------------
Its: Executive Vice President
----------------------------
Date: 8/4/95
---------------------------
/s/ XXXX X. XXXXX
--------------------------------
INTER-CONTINENTAL HOTELS
By: Xxxx Xxxxxxx
-----------------------------
Its: Senior VP Property Management
----------------------------
Date:
---------------------------
/s/ XXXX XXXXXXX
--------------------------------
ITT SHERATON CORPORATION
By: Xxxxxxx X. Xxxxxx
-----------------------------
Its: Senior Vice President
----------------------------
Date: 7/28/95
---------------------------
/s/ XXXXXXX X. XXXXXX
--------------------------------
16
40
LA QUINTA INNS, INC.
By: XX Xxxxxxx, Xx.
------------------------------------
Its: Sr. VP Accounting & Administration
-----------------------------------
Date: 8/29/95
----------------------------------
/s/ XX XXXXXXX, XX.
---------------------------------------
MARRIOTT INTERNATIONAL, INC.
By: Xxxxx X. Xxxxx
------------------------------------
Its: VP Distribution Sales
-----------------------------------
Date: 8/16/95
----------------------------------
/s/ XXXXX X. XXXXX
---------------------------------------
PROMUS HOTELS INC.
By: Xxx Xxxxxx
------------------------------------
Its: VP Reservations
-----------------------------------
Date: 7/18/95
----------------------------------
/s/ XXX XXXXXX
---------------------------------------
UTELL INTERNATIONAL LTD.
By: Xxxx Xxxx
------------------------------------
Its: President
-----------------------------------
Date:
----------------------------------
/s/ XXXX XXXX
---------------------------------------
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41
WESTIN HOTELS & RESORTS
By: Xxxx Xxxxxxx
-----------------------------
Its: Sr. VP Sales & Marketing
----------------------------
Date: 7/25/95
---------------------------
/s/ XXXX XXXXXXX
--------------------------------
--------------------------------
Xxxx X. Xxxxx, III
Date:
---------------------------
/s/ XXXX X. XXXXX, III
--------------------------------
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42
SCHEDULE A
APPLICABLE AGREEMENT TO BE
STOCKHOLDERS AND ADDRESSES EXECUTED PURSUANT TO ARTICLE V
-------------------------- ------------------------------
ANASAZI SERVICE CORPORATION HCC Participant Agreement
0000 X. Xxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Fax No.: (000) 000-0000
BEST WESTERN INTERNATIONAL HCC Participant Agreement/
0000 X. 00xx Xxxxxxx THISCO UltraSwitch User
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
CHOICE HOTELS INTERNATIONAL THISCO UltraSwitch User
0000 X. Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
FORTE HOTELS HCC Participant Agreement/
0000 Xxxxxxxxxx Xxxxx THISCO UltraSwitch User
Xx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
HILTON HOTELS CORPORATION THISCO Ultraswitch User
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Ing
Fax No.: (000) 000-0000
HOSPITALITY FRANCHISE SYSTEMS, INC. HCC Participant Agreement/
3838 X. Xxx Xxxxx THISCO UltraSwitch User
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
19
43
APPLICABLE AGREEMENT TO BE
STOCKHOLDERS AND ADDRESSES EXECUTED PURSUANT TO ARTICLE V
-------------------------- ------------------------------
XXXX TRAVEL GROUP, A DIVISION OF Not Applicable
XXXX ELSEVIER INC.
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
HYATT HOTELS CORPORATION HCC Participant Agreement/
000 X. Xxxxxxx Xxxxxx #00 THISCO UltraSwitch User
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
INTER-CONTINENTAL HOTELS HCC Participant Agreement/
Devonshire House THISCO UltraSwitch User
Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxxx Xxxxxxx
Fax No.: 000 00 00 000 0000
ITT SHERATON CORPORATION HCC Participant Agreement/
Sixty State Street, THISCO UltraSwitch User
World Headquarters
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Fax No.: (000) 000-0000
LA QUINTA INNS, INC. HCC Participant Agreement/
112 E. Pecan St. THISCO UltraSwitch User
X.X. Xxx 0000
Xxx Xxxxxxx, Xx 00000
Attention: X.X. Xxxxxxx, Xx.
Fax No.: (000) 000-0000
MARRIOTT INTERNATIONAL, INC. THISCO UltraSwitch User
One Marriott Drive, Dept. 939.07
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx
Fax No.: (000) 000-0000
20
44
APPLICABLE AGREEMENT TO BE
STOCKHOLDERS AND ADDRESSES EXECUTED PURSUANT TO ARTICLE V
-------------------------- ------------------------------
PROMUS HOTELS INC. HCC Participant Agreement/
0000 Xxxxxxx Xxxx Xxxxxxx THISCO UltraSwitch User
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
UTELL INTERNATIONAL LTD. HCC Participant Agreement/
0 Xxx Xxxxxx Xxxx THISCO UltraSwitch User
Brentford, Xxxxxx XX0 0XX
Attention: Xxxx Xxxx
Fax No.: 000 00 00 000 0000
WESTIN HOTELS & RESORTS HCC Participant Agreement/
0000 0xx Xxxxxx, 00xx Xxxxx THISCO UltraSwitch User
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax No.: (000) 000-0000
XXXX X. XXXXX, III Not Applicable
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
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45
SCHEDULE B TO STOCKHOLDERS AGREEMENT
HOLDER OF PROJECTED VOLUME SHARES NUMBER OF PROJECTED VOLUME SHARES
--------------------------------- ---------------------------------
Anasazi Service Corporation 87
Best Western International 544
Forte Hotels 303
Hospitality Franchise Systems, Inc. 703
Hyatt Hotels Corporation 455
Inter-Continental Hotels Corporation 165
ITT Sheraton Corporation 215
La Quinta Inns, Inc. 142
Promus Hotels Inc. 769
Utell International Ltd. 78
Westin Hotels & Resorts 122
-----
Total 3,583
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46
EXHIBIT 2
STOCK PURCHASE OPTION
-24-
47
STOCK PURCHASE OPTION
This document certifies that LODGING NETWORK, INC. ("LODGING") is,
subject to the terms and conditions set forth herein below, entitled to Three
Thousand Three Hundred Sixty Five (3,365) shares of fully paid and non
assessable Common Stock of Pegasus System, Inc. (hereinafter referred to as
"Pegasus") (the "Pegasus Stock"), upon exercise of this Option and the timely,
full and complete satisfaction of the terms set forth herein.
TERMS AND CONDITIONS
The exercise of this Option is conditioned upon and subject to the below
stated terms and conditions:
1. This Option may only be exercised during a period beginning on
the Effective Date hereof and expiring on the last day of the
thirty sixth (36th) month after the Effective Date hereof (the
"Option Term"). LODGING must take all action required by this
Option for the issuance of the stock during the Option Term.
2. To exercise this Option, LODGING shall deliver to Pegasus the
original of this document and the original of Stock Certificate
No. 002 of The Hotel Clearing Corporation representing Two
Hundred Ten (210) shares of Preferred Stock issued to Lodging
Network, Inc. dated August 10,1993 (the "HCC Stock") and any and
all other Stock Certificates of The Hotel Clearing Corporation
and any other document evidencing any right, title or interest in
or to any current or future ownership of The Hotel Clearing
Corporation in the possession of LODGING. Upon satisfaction by
LODGING of the requirements set forth herein to exercise this
Option, Pegasus shall issue the Pegasus Stock to LODGING.
3. This Option is non-transferable, non assignable, non negotiable
and may not be encumbered, pledged or given as security for any
purpose.
4. This Option shall be fully protected from dilution resulting from
a reverse split of the Common Stock of Pegasus and shall be
entitled to the benefits of any split of the shares of common
stock of Pegasus. Any split or reverse split of the Common Stock
of Pegasus shall result in the proportionate adjustment of the
Pegasus Stock hereunder.
5. LODGING represents and warrants to Pegasus that it is the sole
true and lawful owner of the HCC Stock with full right, title and
interest in and to the HCC Stock as provided herein and with the
full and unencumbered right to sell, transfer, assign and convey
the HCC Stock as provided herein and
EXHIBIT 2 - PAGE 1 OF 3
48
that the HCC Stock is free and clear of any and all debts, liens,
restrictions (except as restricted by the terms and provisions of
the Amended and Restated Stockholders' Agreement for The Hotel
Clearing Corporation dated February 9, 1994) or other
encumbrances and shall remain so during the term of this Option.
The above and foregoing warranties and representations shall be
affirmed upon the exercise of this Option and the transfer of the
HCC Stock as provided herein.
6. As a prospective purchaser of stock of Pegasus, LODGING
acknowledges represents and warrants that the stock is being
purchased as an investment for its own account and without any
present intention of dividing the interest with others,
reselling, or otherwise distributing the stock. In making this
warranty, LODGING acknowledges that representatives of Pegasus
have advised LODGING that (1) the stock is not being registered
under the Federal Securities Act of 1933 on the ground that this
transaction does not involve any public offering, and is
therefore, exempt under Section 4(2) of the Act; (2) Pegasus'
reliance on such exemption is predicated in pad on LODGING's
representation that LODGING has no present intention of dividing
the stock with others or of reselling or otherwise disposing of
it; and (3) although LODGING has the right to dispose of its own
property when and as it sees fit, in the view of the United
States Securities and Exchange Commission, the exemption under
Section 4(2) of the Act is not available to Pegasus if LODGING is
merely acquiring the stock for resale on the occurrence or
nonoccurrence of some predetermined event such as the passage of
one year, a market rise, if the market does not rise, or any
other fixed or determinable event.
7. Following the merger of one or more entities into Pegasus, or any
consolidation of Pegasus and one or more entities in which
Pegasus is the surviving corporation, the exercise of this Option
shall apply to the shares of the surviving corporation.
8. By accepting this Option LODGING agrees, upon exercise of this
Option, to execute and abide by the Stockholders' Agreement
binding upon the stockholders of Pegasus and agrees to be bound
by all other restrictions and agreements generally applicable to
owners of Pegasus Common Stock.
9. Pegasus agrees that it will not hereafter cause or permit The
Hotel Clearing Corporation ("HCC") to merge with The Hotel
Industry Switch Company without the prior written consent of
LODGING (which shall not be unreasonably withheld), for so long
as LODGING holds the HCC Stock.
10. Pegasus agrees to provide LODGING with monthly financial
statements, including a balance sheet and statement of income and
expenses, for each of Pegasus, HCC, and any other subsidiaries of
Pegasus for so long as this Option is outstanding.
EXHIBIT 2 - PAGE 2 OF 3
49
11. Pegasus confirms that LODGING, as the holder of the HCC Stock,
has the rights of the Series A Preferred Stockholder of HCC as
set forth in the HCC Stockholders' Agreement. Upon the exercise
of this Option and the issuance of the Pegasus Stock all of
LODGING's rights as set forth in the Stockholder Agreement for
HCC shall be assigned to Pegasus.
12. Pegasus agrees to act in good faith with respect to the future
operation of the business of HCC, and specifically agrees not to
divert business opportunities or income away from HCC in any
manner inconsistent with the current business plan for HCC and
Pegasus.
13. Notwithstanding any provision hereof to the contrary, this Option
may be assigned by LODGING to a purchaser of the HCC Stock
provided the sale of the HCC Stock is in compliance with the HCC
Stockholders' Agreement.
14. Pegasus agrees to cause the amendment of Article l of the HCC
Stockholders' Agreement to provide that company approval of any
proposed sale of company stock shall not be unreasonably
withheld.
15. Pegasus agrees that it will not cause or permit HCC to make any
cash loans to Pegasus in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00) (in the aggregate) without written consent
of LODGING for so long as LODGING remains a Series A Preferred
Stockholder of HCC.
The corporation has caused this Option to be executed by its duly authorized
officer and the corporate seal is affixed hereto.
PEGASUS SYSTEMS INC.
By:
--------------------------------
Xxxx X. Xxxxx, III
President
Effective Date:
--------------------
AGREED:
LODGING NETWORK, INC.
By:
------------------------------
Its:
------------------------------
EXHIBIT 2 - PAGE 3 OF 3
