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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
PEGASUS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2605174
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
3811 TURTLE CREEK BOULEVARD, SUITE 1100
DALLAS, TEXAS 75219
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities
and is effective upon filing pursuant to General Instruction A(c)(1), please
check the following box: [ ]
If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant to
General Instruction A(c)(2), please check the following box: [ ]
Securities to be registered
pursuant to Section 12(b) of the Act:
NONE
Securities to be registered
pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The information set forth under the heading "Description of Capital
Stock" in the prospectus that is part of the Registration Statement, as
amended, on Form S-1 originally filed by Pegasus Systems, Inc. (the "Company")
on June 5, 1997 (Registration No. 333-28595) is hereby incorporated by
reference.
ITEM 2. EXHIBITS
The following exhibits are filed with the Commission:
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<S> <C>
3.1 The Company's Amended and Restated Certificate of Incorporation.
3.2 The Company's Amended and Restated Bylaws.
3.3 The Company's Second Amended and Restated Certificate of Incorporation.
3.4 The Company's Second Amended and Restated Bylaws.
4.1 [Intentionally Omitted]
4.2 Specimen of the Company's Common Stock, $.01 par value per share.
4.3 Rights Agreement dated June 25, 1996 by and among the Company and
certain holders of capital stock of the Company named therein.
4.4 Common Stock Purchase Warrant issued to Holiday Hospitality
Corporation.
</TABLE>
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration to be signed on
its behalf by the undersigned, thereto duly authorized.
Pegasus Systems, Inc.
By: /s/ Ric L. Floyd
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Ric L. Floyd, Attorney-in-Fact
Date: August 1, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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3.1 The Company's Amended and Restated Certificate of Incorporation.
3.2 The Company's Amended and Restated Bylaws.
3.3 The Company's Second Amended and Restated Certificate of Incorporation.
3.4 The Company's Second Amended and Restated Bylaws.
4.1 [Intentionally Omitted]
4.2 Specimen of the Company's Common Stock, $.01 par value per share.
4.3 Rights Agreement dated June 25, 1996 by and among the Company and
certain holders of capital stock of the Company named therein.
4.4 Common Stock Purchase Warrant issued to Holiday Hospitality
Corporation.
</TABLE>
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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF PEGASUS SYSTEMS, INC.
This Amended and Restated Certificate of Incorporation amends and
restates the Certificate of Incorporation, as amended to date, of Pegasus
Systems, Inc., a corporation originally incorporated in Delaware as "Pegasus
Systems, Inc." on July 10, 1995. This Amended and Restated Certificate of
Incorporation has been duly adopted pursuant to Section 245 of the Delaware
General Corporation Law,
ARTICLE I
The name of this corporation is Pegasus Systems, Inc. (the
"Corporation").
ARTICLE II
The address of the registered office of the Corporation in the State
of Delaware is 1013 Centre Road, New Castle County, Wilmington, Delaware
19805-1297, The name of the registered agent of the Corporation at that address
is The Prentice-Hall Corporation Systems, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful business, act or activity for which
Corporations may be organized under the General Corporation Law of the State of
Delaware. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatsoever.
ARTICLE IV
This Corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock". The total number of shares
which this Corporation is authorized to issue is 22,000,000 shares. The number
of shares of Common Stock which this Corporation is authorized to issue is
20,000,000 shares, par value $0.01 per share. The number of shares of Preferred
Stock which this Corporation is authorized to issue is 2,000,000 shares, par
value $0.01 per share, of which 1,153,847 shall be designated Series A
Preferred Stock (the "Series A Preferred") and 846,153 shall initially be
undesignated as to series.
Any Preferred Stock not previously designated as to series may be
issued from time to time in one or more series pursuant to a resolution or
resolutions providing for such issue duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board), and such
resolution or resolutions shall also set forth the voting powers, full or
limited or none, of each such series of Preferred Stock and shall fix the
designations, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions of each such
series of Preferred Stock. The Board of Directors is authorized to alter
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the designation, rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series of
Preferred Stock, to increase or decrease (but not below the number of shares of
any such series then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired
by the Corporation (whether by redemption, repurchase, conversion to Common
Stock or other means), shall upon such reacquisition resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to series
and available for designation and issuance by the Corporation in accordance
with the immediately preceding paragraph.
The relative rights, preferences, privileges and restrictions granted
to or imposed upon the respective classes of Common Stock and Series A
Preferred Stock or the holders thereof are as follows:
Section 1. Dividends.
(a) The holders of Series A Preferred shall be entitled
to receive, when and as declared by the Board of Directors, out of funds
legally available therefor, dividends at the rate of $0.39 per annum for each
share of Series A Preferred (as adjusted for stock splits, stock dividends,
reclassifications and like events) held by them, payable in preference and
priority to any payment of any dividend or other distribution on Common Stock
of the Corporation. In each year in which any shares of Series A Preferred are
outstanding, no cash dividends shall be declared on the Common Stock unless or
until a cash dividend in an amount equal to or greater than the dividend
declared on the Common Stock shall have been paid to, or declared and a sum
sufficient for payment thereof set apart for the Series A Preferred. Such
dividends on the Series A Preferred shall be cumulative whether or not earned
or declared so that if such dividends in respect of any previous or current
annual dividend period, at the annual rate specified above, shall not be paid
or declared, the deficiency shall be fully paid to the holders of Series A
Preferred before any dividend or other distribution shall be paid on or
declared and set apart for the holders of the Common Stock.
(b) For purposes of this Section 1, unless the context
otherwise requires, a "distribution" shall mean the transfer of cash or other
property without consideration whether by way of dividend or otherwise, payable
other than in Common Stock, or the purchase or redemption of shares of the
Corporation for cash or property. For purposes of this Section 1, a
"distribution" shall not mean (i) a repurchase of Common Stock issued to or
held by employees, officers, directors or consultants of the Corporation or its
subsidiaries upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase, (ii) a repurchase of any
"Projected Volume Shares" as contemplated by the Stockholders Agreement dated
July 21, 1995 among the Company and certain holders of Common Stock or (iii)
the repurchase of certain outstanding shares of capital stock of The Hotel
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Clearing Corporation ("HCC"), a subsidiary of the Corporation, held by Lodging
Network Inc., in exchange for $2,000,000 in cash and the conversion of the
balance of the shares of HCC owned by LNI into 67,300 shares of Common Stock of
the Corporation, as contemplated by the Series A Preferred Stock Purchase
Agreement of the Corporation entered into in June 1996.
Section 2. Liquidation Preference.
In the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, distributions to the shareholders
of the Corporation shall be made in the following manner:
(a) The holders of Series A Preferred shall be entitled
to receive, prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock by reason
of their ownership of such stock, the amount of $6.50 for each share of Series
A Preferred then held by them (as adjusted for all stock splits, dividends,
combinations, reclassifications, and the like with respect to such shares) and,
in addition, an amount equal to all declared but unpaid dividends, if any, on
the shares of Series A Preferred then held by them. If the assets and funds
thus distributed among the holders of Series A Preferred shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of Series A
Preferred in a manner that the amount distributed to each holder of Series A
Preferred shall equal the amount obtained by multiplying the entire assets and
funds of the Corporation legally available for distribution hereunder by a
fraction, the numerator of which shall be the number of shares of Series A
Preferred then held by the holder and the denominator of which shall be the
total number of shares of Series A Preferred then outstanding.
(b) After payment has been made to or set apart for the
holders of Series A Preferred of the full amounts to which they shall be
entitled as set forth in Section 2(a) above, then the entire remaining assets
and funds of the Corporation legally available for distribution, if any, shall
be distributed ratably among the holders of Common Stock in a manner such that
the amount distributed to each such holder shall equal the amount obtained by
multiplying the entire remaining assets and funds of the Corporation legally
available for distribution hereunder by a fraction, the numerator of which
shall be the number of shares of Common Stock then held by such holder and the
denominator of which shall be the total number of shares of Common Stock then
outstanding.
(c) (i) A merger or consolidation of the Corporation with
or into any other corporation or corporations, (ii) the merger of any other
corporation or corporations into the Corporation, in which consolidation or
merger the shareholders of the Corporation receive distributions in cash or
securities of another corporation or corporations as a result of such
consolidation or merger, and (iii) a sale of all or substantially all of the
assets of the Corporation, shall be treated as a liquidation, dissolution or
winding up of the Corporation for purposes of this Section 2, unless the
shareholders of the Corporation immediately prior to such
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transaction are holders (by virtue of shares held in the Corporation) of at
least a majority of the voting securities of the surviving or successor
corporation to the business of the Corporation immediately following such
transaction.
(d) Notwithstanding Sections 2(a) through 2(c) hereof,
the Corporation may at any time, out of funds legally available therefor, (i)
repurchase Common Stock issued to or held by employees, officers, directors or
consultants of the Corporation or its subsidiaries upon termination of their
employment or services pursuant to agreements providing for the right of said
repurchase, (ii) repurchase any "Projected Volume Shares" as contemplated by
the Amended and Restated Stockholders Agreement entered into in June 1996 among
the Company and certain holders of Common Stock, or (iii) repurchase of certain
outstanding shares of capital stock of The Hotel Clearing Corporation ("HCC"),
a subsidiary of the Corporation, held by Lodging Network, Inc., in exchange for
$2,000,000 in cash and the conversion of the balance of the shares of HCC owned
by LNI into 67,300 shares of Common Stock, as contemplated by the Series A
Preferred Stock Purchase Agreement of the Corporation entered into in June
1996.
Section 3. Conversion.
The holders of Series A Preferred Stock shall have conversion rights
as follows (the "CONVERSION RIGHTS"):
(a) Right to Convert. Each share of Series A Preferred
shall be convertible, at the option of the holder thereof, at any time after
the date of issuance of such share, at the office of the Corporation or any
transfer agent for the Series A Preferred, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $6.50 by the
Series A Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. The price at which shares of Common Stock shall be
deliverable upon conversion of shares of Series A Preferred (the "SERIES A
CONVERSION PRICE") shall initially be $6.50 per share of Common Stock and shall
be subject to adjustment as hereinafter provided.
Upon any conversion into Common Stock, all accumulated and unpaid
dividends on the shares of Series A Preferred so converted shall terminate
without any requirement of payment.
(b) Automatic Conversion. Each share of Series A
Preferred shall automatically be converted into one share of Common Stock upon
the earlier to occur of (i) the closing of a firmly underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, relating to the offer and sale of Common Stock for the
account of the Corporation to the public at a price per share (prior to
underwriter commissions and discounts and offering expenses) of not less than
$13.00 (as adjusted for stock splits, stock dividends, reclassifications and
like events) and in which the Corporation receives aggregate gross proceeds of
not less than $10,000,000 (A "QUALIFIED IPO"), or (ii) such effective date as
the Corporation shall set no more than ten (10) days following the affirmative
vote at a duly noticed meeting or by duly solicited written consent, of the
holders of more than sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred,
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in favor of the conversion of all outstanding shares of Series A Preferred into
Common Stock. Prior to the closing of a Qualified IPO, upon the closing of an
offering pursuant to which any holder of Series A Preferred has exercised
registration rights pursuant to the Rights Agreement originally entered into by
and among the Corporation and the Purchasers named therein in June 1996, each
share of Series A Preferred for which such registration rights were exercised
shall automatically be converted into one share of Common Stock. In the event
of the automatic conversion of the Series A Preferred upon a Qualified IPO, the
person(s) entitled to receive the Common Stock issuable upon such conversion of
Series A Preferred shall not be deemed to have converted such Series A
Preferred until immediately prior to the closing of such transaction.
(c) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Series A Preferred. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series A Preferred shall be
entitled to convert the same into full shares of Common Stock and to receive
certificates therefor, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Preferred, and shall give written notice to the
Corporation at such office that he elects to convert the same; provide,
however, that in the event of an automatic conversion pursuant to Section 3(b),
the outstanding shares of Series A Preferred shall be converted automatically
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent; provided, further, that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless the certificates evidencing such shares of Series A
Preferred are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation
shall, as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at such
office to such holder of Series A Preferred, a certificate or certificates for
the number of shares of Common Stock to which he shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash amounts payable as
the result of a conversion into fractional shares of Common Stock. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred to
be converted, or in the case of automatic conversion on the date of closing of
the public offering or the effective date set by the Corporation as provided in
paragraph 3(b) following the requisite stockholder approval, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(d) Adjustments to Series A Conversion Price for Dilutive
Issues.
(i) Special Definitions. For purposes of this
Section 3(d), the following definitions shall apply:
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(1) "OPTIONS" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean
any evidences of indebtedness, Preferred Stock (other than Series A Preferred)
or other securities convertible into or exchangeable for Common Stock.
(3) "ADDITIONAL SHARES OF COMMON" shall
mean all shares of Common Stock issued (or, pursuant to Section 3(d)(iii),
deemed to be issued) by the Corporation after the Series A Original Issue Date,
other than shares of Common Stock issued, issuable or, pursuant to Section
3(d)(iii), deemed to be issued:
(A) upon conversion of shares of
the Series A Preferred;
(B) to officers, directors or
employees of, or consultants to, the Corporation or any subsidiary pursuant to
a stock grant, option plan or purchase plan or other employee stock incentive
program or arrangement approved by the Board of Directors, but not exceeding an
aggregate of 600,000 shares of Common Stock (net of any repurchases of such
shares or any other shares of Common Stock originally issued to officers,
directors, employees or consultants to the Corporation, and net of cancellation
or expiration of options), subject to appropriate adjustment for all stock
splits, dividends, subdivisions, combinations, recapitalizations and the like;
(C) as a dividend or distribution
on the Series A Preferred;
(D) in connection with any
transaction for which adjustment is made pursuant to Section 3(e)(i), (ii) and
(iii) hereof,
(E) shares of Common Stock issued
to reacquire shares from existing stockholders, provided such shares of Common
Stock are issued at a substantially identical price to the shares being
reacquired.
(F) any shares of Common Stock
issued or issuable, if the holders of more than sixty-six and two-thirds
percent (66-2/3%) of the Series A Preferred then outstanding agree in writing
that such shares shall not constitute Additional Shares of Common Stock; or
(G) up to an aggregate of 50,000
additional shares of Common Stock issued by the Corporation from time to time.
(ii) No Adjustment of Series A Conversion Price.
No adjustment in the Series A Conversion Price shall be made in respect of the
issuance of Additional Shares of Common unless the consideration per share
(determined pursuant to Section 3(d)(v) hereof) for
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an Additional Share of Common issued or deemed to be issued by the Corporation
is less than the Series A Conversion Price in effect on the date of, and
immediately prior to such issue.
(iii) Options add Convertible Securities. In the
event that the Corporation at any time or from time to time after the Series A
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the
maximum number of shares of Common Stock issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common issued as of the time of such issue or, in case
such a record date shall have been fixed, as of the close of business on such
record date; provided, however, that Additional Shares of Common shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 3(d)(v) hereof) for such Additional Shares of Common would
be less than the Series A Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(1) no further adjustment in the Series
A Conversion Price shall be made upon the subsequent issue of such Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities, in each case, pursuant
to their respective terms;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, or decrease in
the number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Series A Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange
under such Convertible Securities;
(3) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series A Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
issued were shares of Common Stock, if any, actually issued upon the exercise
of such Options or the conversion or exchange of such Convertible Securities
and the consideration received therefor was the consideration actually received
by the Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation upon such exercise,
or for the issue of all
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such Convertible Securities which were actually converted upon or exchanged,
plus the additional consideration, if any, actually received by the Corporation
upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for the Additional
Shares of Common deemed to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation upon the issue of the Convertible Securities with respect to which
such Options were actually exercised;
(4) no readjustment pursuant to clauses
(2) or (3) above shall have the effect of increasing the Series A Conversion
Price to an amount which exceeds the lower of (i) the Series A Conversion Price
on the original adjustment date, or (ii) the Series A Conversion Price that
would have resulted from any issuance of Additional Shares of Common between
the original adjustment date and such readjustment date; and
(5) in the case of an Option which
expires by its terms not more than 30 days after the date of issue thereof, no
adjustment of the Series A Conversion Price shall be made until the expiration
or exercise of such Option, whereupon such adjustment shall be made in the same
manner provided in clause (3) above.
(iv) Adjustment of Series A Conversion Price Upon
Issuance of Additional Shares of Common. In the event that this Corporation
shall issue Additional Shares of Common (including Additional Shares of Common
deemed to be issued pursuant to Section 3(d)(iii)) without consideration or for
a consideration per share less than the Series A Conversion Price in effect on
the date of and immediately prior to such issue, then and in such event such
Series A Conversion Price shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such Series A
Conversion Price theretofore in effect by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such issue plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common so issued would purchase at such Series A Conversion Price in
effect immediately prior to such issue, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such Additional Shares of Common so issued; provided,
however, that, for the purposes of this Section 3(d)(iv), all shares of Common
Stock issuable upon exercise, conversion or exchange of outstanding Options or
Convertible Securities, as the case may be, shall be deemed to be outstanding,
and immediately after any Additional Shares of Common are deemed issued
pursuant to Section 3(d)(iii), such Additional Shares of Common shall be deemed
to be outstanding.
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(v) Determination of Consideration. For purposes
of this Section 3(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common shall be computed as follows:
(1) Cash and Property. Such consideration
shall:
(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board; and
(C) in the event Additional Shares
of Common are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares
of Common deemed to have been issued pursuant to Section 3(d)(iii), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount if any,
received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities by
(y) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, as determined in Section 3(d)(iii)
hereof.
(e) Adjustments to Conversion Price for Other Dilutive
Events.
(i) Adjustments for Subdivisions, Stock
Dividends, Combinations or Consolidations of Common Stock. In the event that
the Corporation at any time or from time to time shall declare or pay, without
consideration, any dividend on Common Stock payable in Common Stock or in any
right to acquire Common Stock for no consideration, or effects a subdivision or
combination of its outstanding shares of Common Stock into a greater or smaller
number of shares without a proportionate and corresponding subdivision or
combination of its
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outstanding shares of Series A Preferred, then and in each such event the
Series A Conversion Price shall be appropriately increased or decreased
proportionally.
(ii) Adjustments for Reclassification, Exchange
and Substitution. If the Common Stock issuable upon conversion of the Preferred
Stock shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than in an event provided for in Section
3(e)(i) above), the Series A Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted such that the shares of Series A Preferred shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon
conversion of shares of such Series A Preferred immediately before that change.
(iii) Adjustments for Other Dividends and
Distributions. In the event that the Corporation shall declare a distribution
payable in securities of other issuers, evidences of indebtedness issued by
this Corporation or other issuers, assets (excluding cash dividends) or options
or rights not referred to in subsection 2(d)(iii) and for which no adjustment
is made pursuant to Section 3(e)(i) or Section 3(e)(ii), the holders of Series
A Preferred shall be entitled to a proportionate share of any such distribution
as though they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Series A Preferred are convertible as of
the record date fixed for the determination of the holders of Common Stock of
the Corporation entitled to receive such distribution.
(f) No Impairment. Except as provided in Sections 5 and 6
hereof, the Corporation will not, by amendment of its Certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in
good faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the holders of Series A Preferred
against impairment.
(g) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price of any Series A
Preferred pursuant to this Section 3, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of Series A Preferred a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of such Series A Preferred, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the Series A Conversion Price at the
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any,
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of other property which at the time would be received upon the conversion of
such holder's shares of Series A Preferred.
(h) Notices of Record Date. In the event that this
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) to merge or consolidate with or into any
other corporation, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up; then, in connection
with each such event, this Corporation shall send to the holders of Series A
Preferred:
(A) at least 20 days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (iii) and (iv) above; and
(B) in the case of the matters
referred to in (iii) and (iv) above, at least 20 days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by
first class mail, postage prepaid, addressed to the holders of Series A
Preferred at the address for each such holder as shown on the books of this
Corporation.
(i) Reservation of Shares. The Corporation shall at all
times reserve and keep available, out of its authorized but unissued Common
Stock, solely for the purpose of effecting the conversion of the Series A
Preferred, the full number of shares of Common Stock deliverable upon the
conversion of all Series A Preferred from time to time outstanding. The
Corporation shall from time to time (subject to obtaining necessary director
and stockholder consent), in accordance with the laws of the State of Delaware,
increase the number of authorized shares of Common Stock if at any time the
authorized number of shares of its Common Stock remaining unissued shall not be
sufficient to permit the conversion of all of the shares of Series A Preferred
at the time outstanding.
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<PAGE> 12
(j) Issuance Taxes. The Corporation shall pay any and all
issue and other taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on conversion of Series A Preferred pursuant to this
Section 3.
Section 4. Redemption of Series A Preferred.
(a) On each of the fifth, sixth, seventh and eighth
anniversaries of the date of the initial sale of Series A Preferred (the
"Series A Original Issue Date"), to the extent the shares of Series A Preferred
have not been redeemed or converted prior to such date and to the extent
requested by any holder thereof, the Corporation shall redeem, subject to the
proviso at the end of the third sentence of this paragraph, at the Redemption
Price, as defined below, an amount equal to up to one-quarter, one-half,
three-quarters and all (respectively) of the issued, outstanding, and
unconverted shares of Series A Preferred held by such holder, from any source
of funds legally available therefor. Not less than 30 and not more than 60
days before the fifth, sixth, seventh and eighth anniversaries of the Series A
Original Issue Date (and each anniversary thereafter so long as any shares of
Series A Preferred remain unredeemed and unconverted), the Corporation shall
send to each holder of Series A Preferred the audited financial statements of
the Corporation for the prior fiscal year (unless previously furnished to such
holder) together with a notice advising such holders of their rights under this
subsection. Each such holder shall have until each such anniversary date to
request redemption of all or part of such shares which may as of such
anniversary date be redeemed; provided, however, that no redemption shall be
made on such anniversary date unless holders of more than sixty-six and
two-thirds percent (66-2/3%) of the then outstanding shares of Series A
Preferred request redemption pursuant to such notice. If no funds or
insufficient funds are available to the Corporation at any time to meet the
Corporation's redemption obligations pursuant to this subsection, or if any
holder does not request the Corporation to redeem such holder's shares of
Series A Preferred to the full extent permitted by this subsection, then the
Corporation's obligations to redeem such shares shall in both cases be carried
over to the succeeding year (subject to the same limitations on payment as set
forth above) until all shares entitled to be redeemed pursuant to this
subsection have been redeemed, and such holders shall have similar rights
during the corresponding 30 to 60 day period of each succeeding year; provided,
however, that the shares of Series A Preferred which were not redeemed on the
anniversary on which such shares were initially eligible for redemption
hereunder (that is, on the applicable fifth, sixth or seventh anniversary of
the Series A Original Issue Date, without regard to whether the Corporation had
sufficient funds available on such dates for such redemption hereunder) shall
be (i) redeemed at the Redemption Price, as defined below and (ii) entitled to
the dividend, conversion and other rights, preferences, privileges and
restrictions of the Series A Preferred until such shares have been redeemed.
(b) The redemption price for Series A Preferred
repurchased pursuant to this Section 4 (the "REDEMPTION PRICE") shall be an
amount equal to the sum of (i) $6.50 per share, plus (ii) $0.39 per share for
each full year from the Series A Original Issue Date to the date of actual
redemption plus a pro rata fraction thereof for any additional portion of a
full year to the date of redemption (each such full year or such additional
portion of a full year being referred to as a "Dividend Period"), provided that
the amount payable under this clause (ii) in respect
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of any Dividend Period shall be reduced by an amount equal to the difference,
if any, between (x) the amount of dividends declared and paid or set aside for
payment on each share of Series A Preferred during such Dividend Period, less
(y) the amount of dividends declared and paid or set aside for payment during
such Dividend Period on the number of shares of Common Stock into which such
share of Series A Preferred shall then be convertible, plus (iii) any dividends
declared but not paid or set aside for payment on such share of Series A
Preferred.
(c) In the event insufficient funds are available to
redeem all shares of Series A Preferred entitled and electing to be redeemed
pursuant to Section 4(a), the Corporation shall effect each such redemption pro
rata among the holders of the Series A Preferred based upon the number of
shares of Series A Preferred then held by each holder and electing to be
redeemed.
(d) At least 30 but not more than 60 days' previous
notice by certified mail, postage prepaid, shall be given to the holders of
record of the Series A Preferred for any redemption pursuant to this
subsection, such notice to be addressed to each holder at the address shown in
the Corporation's records and which shall specify the date of redemption, the
number of shares of the holder to be redeemed and the date at which conversion
rights terminate which date shall be no earlier than five days prior to the
date fixed for redemption. Subject to approval by more than sixty- six and
two-thirds percent (66-2/3%) of the outstanding shares of Series A Preferred
pursuant to Section 4(a), on or after the date of redemption as specified in
such notice, each holder shall surrender his certificate for the number of
shares to be redeemed as stated in the notice (except that such number of
shares shall be reduced by the number of shares which have been converted
pursuant to Section 3 hereof between the date of notice and the date on which
conversion rights terminate) to this Corporation at the place specified in such
notice. Provided such notice is duly given, and provided that on the redemption
date specified there shall be a source of funds legally available for such
redemption, and funds necessary for the redemption shall have been paid or made
available at the place fixed for redemption, then all rights with respect to
such shares shall, after the specified redemption date, terminate whether or
not said certificates have been surrendered, excepting only that in the latter
instance the right of the holder to receive the redemption price thereof,
without interest, upon such surrender will not terminate.
Section 5. Voting.
Except as otherwise required by law or by Section 6 hereof, the holder
of each share of Common Stock issued and outstanding shall have one vote with
respect to such share and the holder of each share of Series A Preferred shall
be entitled with respect to such share to a number of votes equal to the number
of shares of Common Stock into which such share of Series A Preferred could be
converted at the record date for determination of the stockholders entitled to
vote on such matters, or, if no such record date is established, at the date
such vote is taken or any written consent of stockholders is solicited, such
votes to be counted together with all other shares of stock of the Corporation
having general voting power and not separately as a class. All holders of
Series A Preferred shall have full voting rights and powers equal to the
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<PAGE> 14
voting rights and powers of the holders of Common Stock, and shall be entitled
to vote, together with the holders of Common Stock, with respect to any
question upon which holders of Common Stock have the right to vote. Holders of
Common Stock and Series A Preferred shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation.
Fractional votes by the holders of Series A Preferred shall not, however, be
permitted and any fractional voting rights shall (after aggregating all shares
into which shares of Series A Preferred held by each holder could be converted)
be rounded to the nearest whole number.
Section 6. Covenants.
(a) Required Consent of Series A Preferred. In addition
to any other rights provided by law, so long as at least 180,000 shares of
Series A Preferred shall be outstanding (as appropriately adjusted for all
stock splits, dividends, combinations, recapitalizations and the like), this
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of such outstanding shares
of the Series A Preferred, voting together as a single class:
(i) amend or repeal any provision of, or add any
provision to, this Corporation's Amended and Restated Certificate of
Incorporation or Bylaws;
(ii) designate any new series of Preferred Stock,
or increase the authorized number of shares of any series or Preferred Stock;
(iii) authorize (or increase the authorized number
of) any class or series of capital stock or any other security convertible into
or exchangeable for shares of any class or series of capital stock having
rights, preferences or privileges senior to or on parity with the Series A
Preferred;
(iv) increase or decrease (other than by
redemption or conversion) the total number of authorized shares of Series A
Preferred or change the existing rights, preferences or privileges of the
Series A Preferred,
(v) authorize (A) a liquidation or dissolution of
the Corporation, or (B) a recapitalization or reorganization of the
Corporation, sale or transfer of all or substantially all of the assets of the
Corporation or merger or consolidation of the Corporation if, as a result of
such recapitalization, reorganization, sale, transfer, merger or consolidation,
the stockholders of the Corporation immediately prior to the closing of such
recapitalization, reorganization, sale, transfer, merger or consolidation (and
prior to any related transfers of shares and other transactions) shall own less
than [75%] of the voting securities of the successor corporation to the
business of the Corporation;
(vi) sell, transfer, or grant an exclusive license
to, any material, patents, copyrights, trademarks, or applications therefor,
proprietary or confidential information of the Corporation or any other
material asset, except for licenses or sublicenses granted by the
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<PAGE> 15
Corporation in the ordinary course of its business, and other than to a direct
or indirect subsidiary of the Corporation;
(vii) approve the repurchase, redemption or other
acquisition of any Common Stock of the Corporation, other than (A) repurchases
pursuant to agreements approved by the Board of Directors that grant to the
Corporation a right to repurchase such Common Stock upon the termination of the
service or employment of a consultant, director or employee, or (B) repurchases
of any "Projected Volume Shares" as contemplated by the Stockholders Agreement
dated July 21, 1995 among the Company and certain holders of Common Stock; or
(viii) authorize the payment of a cash dividend to
any holders of any class or series of capital stock of the Corporation.
Section 7. Common Stock.
(a) Dividend Rights. Subject to the prior rights of
holders of all classes of stock at the time outstanding having prior rights as
to dividends, the holders of the Common Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of any assets of the
Corporation legally available therefor, such dividends as may be declared from
time to time by the Board of Directors.
(b) Liquidation Rights. Upon the liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation shall be
distributed as provided in Section 2 of this Article IV.
(c) Redemption. The Common Stock is not redeemable.
(d) Voting Rights. The holder of each share of Common
Stock shall have the right to one vote, and shall be entitled to notice of any
shareholders' meeting in accordance with the Bylaws of this Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
Section 8. Residual Rights.
All rights accruing to the outstanding shares of this Corporation not
expressly provided for to the contrary herein shall be vested in the Common
Stock.
ARTICLE V
The Corporation is to have perpetual existence.
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ARTICLE VI
Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins or unless the Bylaws of the Corporation shall so provide.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter, amend or repeal the Bylaws of the Corporation.
ARTICLE VIII
(a) To the fullest extent permitted by the General
Corporation Law of the State of Delaware as the same exists or as may hereafter
be amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
(b) The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he, his estate or legal representative is or was a
director, officer, employee or agent of the Corporation or any predecessor of
the Corporation or serves or served at any other enterprise as a director,
officer, employee or agent at the request of the Corporation or any other
predecessor to the Corporation.
(c) No amendment nor repeal of this Article VIII, nor the
adoption of any provision of this Corporation's Certificate of Incorporation
inconsistent with this Article VIII, shall eliminate or reduce the effect of
this Article VIII, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VIII, would accrue
or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE X
Vacancies created by newly created directorships, created in
accordance with the Bylaws of this Corporation, may be filled by the vote of a
majority, although less than a quorum, of the directors then in office, or by a
sole remaining director.
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Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided
in the Bylaws of the Corporation.
ARTICLE XI
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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EXHIBIT 3.1
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated of Certificate to be duly executed this ____ day of ___________, 1997.
By: /s/ JOHN F. DAVIS, III
-------------------------------------
John F. Davis, III
President and Chief Executive Officer
ATTEST:
/s/ RIC L. FLOYD
- ----------------------------------
Ric L. Floyd, Secretary
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<PAGE> 1
EXHIBIT 3.2
CONFIDENTIAL
------------
AS OF JUNE 25, 1996
AMENDED AND RESTATED BYLAWS
OF
PEGASUS SYSTEMS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES AND FISCAL YEAR
SECTION 1.01. REGISTERED OFFICE. The registered office of the
Corporation shall be as stated in the Certificate of Incorporation until a
change in such office is established by resolution of the Board of Directors
and a statement of such change is filed in the manner provided by applicable
law.
SECTION 1.02. OTHER OFFICES. The Corporation may also have offices
and keep its books, documents, and records at such other places within or
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the Corporation may require.
SECTION 1.03. FISCAL YEAR. The fiscal year of the Corporation shall
end on the 31st day of December in each year or on such other date as the Board
of Directors may designate by resolution.
ARTICLE II
THE STOCKHOLDERS
SECTION 2.01. TYPES OF STOCK.
(a) The Corporation's Certificate of Incorporation, as
amended (the "Certificate of Incorporation") currently authorizes two classes
of capital stock - Common Stock and Series A Preferred Stock ("Series A
Preferred"). The aggregate number of shares of Common Stock and Series A
Preferred which the Corporation has authority to issue is set forth in the
Certificate of Incorporation. Unless otherwise specified, references in these
Bylaws to the issued and outstanding shares of capital stock of the Corporation
shall mean the issued and outstanding shares of Common Stock as if all issued
and outstanding shares of Series A Preferred had been converted to Common
Stock.
(b) Except as provided herein or in the Certificate of
Incorporation, or except as may be provided by the laws of the State of
Delaware, the holders of Common Stock and Series A Preferred shall have
exclusively all rights of stockholders. Each holder of Common Stock or Series A
Preferred shall be entitled to one (1) vote per share of stock owned by such
<PAGE> 2
holder, except as otherwise provided or limited herein or in the Certificate of
Incorporation, or as otherwise provided or limited in (i) that certain Amended
and Restated Stockholders Agreement dated as of June 25, 1996 to which the
Corporation is a party (as it may be amended, the "Stockholders Agreement") and
(ii) that certain Rights Agreement dated as of June 25, 1996 to which the
Corporation is a party (as it may be amended, the "Rights Agreement"). Any
holder of stock may enter into an agreement with the Corporation whereby such
holder agrees not to vote such stock in all or certain circumstances; and in
such case such shares held by such holder as to which such an agreement applies
shall, for all purposes, not be considered to be entitled to vote on any
matters as to which such holder has agreed not to vote such shares. No person
or entity, together with all "affiliates" (as that term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as in effect as of June 1,
1995) of that person or entity, may beneficially own more than twenty-five
percent (25%) of the issued stock. The limitation in the preceding sentence
shall terminate on the earliest to occur of (x) the termination of the
Stockholders Agreement, (y) July 21, 1998 or (z) the closing of a Qualified
Public Offering. A "Qualified Public Offering" shall mean any underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, relating to the offering and sale of Common
Stock for the account of the Corporation to the public at a price per share
(prior to underwriter commissions and offering expenses) of not less than
$13.00 (as adjusted for stock splits, stock dividends, reclassifications and
like events) and in which the Corporation receives aggregate gross proceeds of
not less than $10,000,000.
(c) Neither the Corporation nor any other stockholder
shall have any power or authority (i) to require any stockholder to unwillingly
resell his or its stock to the Corporation or to any other person or entity, or
(ii) to force the purchase of any stockholder's stock, except in the case of
(i) or (ii) as part of a merger or sale of the Corporation approved by the
Board of Directors or as set forth herein, in the Corporation's Certificate of
Incorporation or the Stockholders Agreement.
SECTION 2.02. PLACE OF MEETING; ANNUAL MEETING. All meetings of the
stockholders of the Corporation shall be held at the principal offices of the
Corporation, or at such other place within or without the State of Delaware as
shall be designated by the Board of Directors in the notice of such meeting.
The Board of Directors may fix by resolution the date and time of the annual
meeting of the stockholders, and at said meeting the stockholders then entitled
to vote shall elect directors to serve until the next annual meeting of
stockholders and until their successors are duly nominated, qualified and
elected, and shall transact such other business as may properly be brought
before the meeting.
SECTION 2.03. SPECIAL MEETINGS. Except as otherwise provided by
applicable law, the Certificate of Incorporation, or these Bylaws, a special
meeting of the stockholders of the Corporation entitled to vote may be called
at any time only by the affirmative vote of at least two of the directors then
in office, or the President. Except for actions relating to the conduct of the
meeting under Section 2.05 of these Bylaws or the appointment of judges under
Section 2.10 of these Bylaws, at a special meeting of the stockholders, no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting unless all of the stockholders of
record entitled to vote for or against such an action are present in person or
by proxy in which case any and all business may be transacted at the meeting
even if the meeting is held without notice.
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<PAGE> 3
SECTION 2.04. NOTICE OF MEETINGS. Unless otherwise provided by
applicable law, the Certificate of Incorporation, or these Bylaws, written
notice of the place, date, and hour of every meeting of the stockholders,
whether annual or special, shall be given to each stockholder of record
entitled to vote at the meeting at the address of such stockholder as it
appears on the records of the Corporation, not less than ten (10) nor more than
sixty (60) calendar days before the date of the meeting. Every notice of a
special meeting shall state the purpose or purposes thereof.
SECTION 2.05 QUORUM. MANNER OF ACTING AND ADJOURNMENT. (a) Except
as otherwise provided by the Certificate of Incorporation or these Bylaws, the
record holders of at least two-thirds (2/3) of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote thereat, must be
present in person or represented by proxy to constitute a quorum at any annual
or special meeting of the stockholders. Whether or not a quorum is present or
represented at any meeting of the stockholders, the record holders of
two-thirds (2/3) of the shares of capital stock present or so represented shall
have the power to adjourn the meeting from time to time. When a meeting is
adjourned to another time or place, no notice need be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At any adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting. If an adjournment is for more than thirty
(30) calendar days, or if after an adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting. Except as
otherwise provided by the Certificate of Incorporation or these Bylaws, the
affirmative vote of the record holders of two-thirds (2/3) of the shares of
capital stock of the Corporation present in person or represented by proxy and
entitled to vote on the subject matter at a meeting duly called and held with
the necessary quorum, shall be the act of the stockholders at any annual or
special meeting of stockholders. At any meeting at which amendment of the
Certificate of Incorporation, or a merger, consolidation, sale of all or
substantially all the assets, dissolution or liquidation of the Corporation, or
any other matter requiring under applicable law a vote different than that set
forth in the immediately preceding sentence for the taking of such action, is
to be voted upon, then, in addition to the vote required under applicable law
at the meeting in question, such matter or action, in order to be approved,
must also be approved at such meeting by the affirmative vote of the record
holders of at least two-thirds (2/3) of the shares of stock present in person
or represented by proxy and entitled to vote thereon at such a meeting at which
the record holders of at least two-thirds (2/3) of the shares of stock then
issued and outstanding and entitled to vote thereat are present in person or by
proxy. Except as otherwise required by applicable law or provided by the
Certificate of Incorporation or these Bylaws, the stockholders present in
person or by proxy at a meeting duly called and held can continue to do
business with respect to any matters properly brought before the meeting, until
adjournment, notwithstanding withdrawal of enough stockholders to leave less
than a quorum.
(b) Shares of its own capital stock belonging to the Corporation,
or to another corporation if a majority of the shares entitled to vote in the
election of directors of such other corporation is held directly or indirectly
by the Corporation, shall not be entitled to vote and shall not be counted for
quorum purposes.
3
<PAGE> 4
(c) Notwithstanding the requirements of paragraph (a) of this
Section 2.05, the following corporate actions shall require the affirmative
vote of the record holders of two-thirds (2/3) or more of the issued and
outstanding shares of capital stock of the Corporation: (i) the transfer and/or
assumption of all or substantially all of the assets or liabilities of, or the
dissolution of, the Corporation, The Hotel Industry Switch Company, and/or The
Hotel Clearing Corporation; (ii) any material acquisition, disposition,
consolidation, or merger effected by the Corporation; (iii) the execution of
any contract by the Corporation involving a liability or obligation to the
Corporation in excess of five million dollars ($5,000,000.00) other than in
connection with a public offering of securities; (iv) the incurrence of debt in
excess of one million dollars ($1,000,000.00) other than in connection with a
public offering of securities; and (vii) the liquidation, dissolution or
declaration of bankruptcy by the Corporation. This Subsection (c) shall
terminate upon a Qualified Public Offering of the Corporation's stock.
SECTION 2.06. ORGANIZATION. At every meeting of the stockholders,
the Chairman of the Board, or in the case of a vacancy in the office or absence
of the Chairman of the Board, one of the following persons present in the order
stated: the Vice Chairmen in their order of rank, the President, the
Vice-Presidents in their order of rank, a chairman designated by the Board of
Directors, or a chairman chosen by the stockholders entitled to cast two-thirds
(2/3) of the votes that all stockholders present in person or by proxy are
entitled to cast, shall act as chairman of the meeting, and the Secretary, or,
in such person's absence, an Assistant Secretary, if any, or any person
appointed by the chairman of the meeting, shall act as secretary of the
meeting.
SECTION 2.07. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
such stockholder by proxy, but no such proxy shall be voted or acted upon after
three (3) years from its date, unless the proxy provides for a longer period.
Every proxy shall be executed in writing by the stockholder, or by the
stockholder's duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Corporation. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is coupled is
an interest in the stock itself or an interest in the Corporation generally.
SECTION 2.08. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except
as otherwise provided by statute, any action that may be taken at a meeting of
stockholders by a vote of the stockholders may be taken with the written
consent of stockholders owning (and by such written consent, voting) in the
aggregate not less than the minimum percentage of the total number of shares
that by statute, the Certificate of Incorporation or these Bylaws are required
to be voted with respect to such proposed corporate action; provided, however,
that the written consent of a stockholder who would not have been entitled to
vote upon the action if a meeting were held shall not be counted; and further
provided, that prompt notice shall be given to all stockholders of the taking
of such corporate action without a meeting if less than unanimous written
consent of all stockholders who would have been entitled to vote on the action
if a meeting were held is obtained.
4
<PAGE> 5
SECTION 2.09. VOTING LISTS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten (10) calendar
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting. The list shall be arranged in alphabetical
order showing the address of each stockholder and the number of shares
registered in the name of such stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least (10) calendar days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger of the Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section, or the books of the Corporation or are entitled to vote in person or
by proxy at any annual or special meeting of the stockholders.
SECTION 2.10. VOTING PROCEDURES; JUDGES OF ELECTION. Except as
otherwise provided by applicable law, the Certificate of Incorporation, or
these Bylaws, or as directed by the chairman of the meeting, the election of
directors and the vote upon any other matter need not be by written ballot. In
advance of any meeting of stockholders, the Board of Directors may appoint one
or more judges of election, who need not be stockholders, to act at such
meeting or any adjournment thereof. If judges of election are not so appointed,
the chairman of any such meeting may, and, upon the demand of any stockholder
entitled to vote or such stockholder's proxy, at the meeting and before voting
begins, shall appoint judges of election. In the case of judges appointed upon
demand of a stockholder, the number of judges shall be either one (1) or three
(3), as determined by the stockholders present or represented by proxy,
entitled to cast a majority of votes that all stockholders present or so
represented are entitled to cast thereon. No person who is a candidate for
office shall act as a judge. In case any person appointed as judge fails to
appear or refuses to act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the convening of the meeting, or at the
meeting by the chairman of the meeting.
Except as provided in the Certificate of Incorporation, if judges of
election are appointed as aforesaid, they shall (a) determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity, and effect
of proxies; (b) receive votes or ballots; (c) hear and determine all challenges
and questions in any way arising in connection with the right to vote; (d)
count and tabulate all votes; (e) determine the results of the election or
other vote; and (f) do such acts as may be proper to conduct the election or
vote with fairness to all stockholders. If there be three (3) or more judges of
election, the decision, act, or certificate of a majority shall be effective in
all respects as the decision, act, or certificate of all.
On request of the chairman of the meeting or of any stockholder
entitled to vote or such stockholder's proxy, the judges shall make a report in
writing of any challenge, question, or other matter determined by them, and
shall execute a certificate of any fact found by them.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. POWERS. The Board of Directors shall have full power
to manage the business and affairs of the Corporation, and all powers of the
Corporation, except those specifically reserved or granted to the stockholders
by applicable law, the Certificate of Incorporation, these Bylaws, the
Stockholders Agreement or the Rights Agreement, are hereby granted to and
vested in the Board of Directors. Without limiting the foregoing, the Board of
Directors may, if it so desires, appoint one or more advisory councils to the
Board of Directors, consisting of such numbers and with such duties as the
Board may deem appropriate.
SECTION 3.02. NUMBER, NOMINATIONS, ELECTION, TERM OF OFFICE,
REMOVAL, TERMINATION AND VACANCIES. The Board of Directors of the Company shall
consist of nine (9) members, (i) one (1) of whom shall be the Chief Executive
Officer of the Corporation, (ii) six (6) of whom shall be designated by the
holders (the "Existing Stockholders") from time to time of Common Stock (other
than any holders who acquired Common Stock upon conversion or exchange of
Series A Preferred), and (iii) two (2) of whom shall be designated by the
holders from time to time of Series A Preferred or Common Stock issued upon
conversion or otherwise in respect of Series A Preferred (the "Preferred
Holders"). If the number of directors serving on the Board of Directors shall
be increased or decreased, the Preferred Holders shall be entitled to designate
a minimum of twenty percent (20%) of the total number of directors elected to
serve on the Board of Directors. All nominations for directors shall be
submitted to the Board of Directors prior to each annual meeting of
stockholders of the Corporation and any other meeting of stockholders at which
directors are to be elected (or prior to the circulation of any written consent
of stockholders in lieu of such meeting(s)). The designated nominees of the
Existing Stockholders (the "Designees") shall be determined as follows: Each
Existing Stockholder shall be requested to nominate one individual. This list
of nominees shall be submitted to the Existing Stockholders who shall then
select the requisite number of Designees by voting their shares of Common Stock
on a non-cumulative basis for the number of Designees to be selected. The
individual(s) receiving a plurality of votes shall be the Designee(s).
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Elections of directors need not be by written ballot. Each director
shall serve for the term for which he or she is elected and until his or her
successor shall have been duly nominated, elected and qualified (except in the
event of his or her earlier death, resignation or removal).
If the Existing Stockholders or the Preferred Holders wish to cause
the removal of the director(s) which they had designated for the Board of
Directors, the other stockholders entitled to vote shall vote in favor of such
removal, as provided in the Stockholders Agreement and the Rights Agreement.
Any vacancies on the Board of Directors resulting from death,
resignation, termination, removal by the stockholders or from any increase in
the number of directors may be filled by the stockholders at the next annual
meeting thereof or at a special meeting called for that purpose in accordance
with Section 2.03 of Article II of these Bylaws. In such event, the
stockholder(s) that had designated such director(s) shall be entitled to
designate and nominate as provided herein a successor to fill the vacancy so
created, and in such instance the stockholder(s) shall vote in favor of such
designee or nominee as provided herein. Any director elected in accordance with
the two preceding sentences of this Section 3.02 shall hold office for the
remainder of the full term of the directorship being filled by such director
and until a successor shall have been elected and qualified. This Section 3.02
shall terminate upon a Qualified Public Offering of the Corporation's stock.
SECTION 3.03. QUALIFICATIONS. All directors of the Corporation
shall be natural persons, but need not be residents of Delaware or stockholders
of the Corporation.
SECTION 3.04. RESIGNATIONS. Any director of the Corporation may
resign at any time by giving written notice to the Chairman of the Board, the
President, or the Secretary of the Corporation. Such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. Upon the effectiveness
of such resignation, the vacancy created thereby shall be filled in the manner
provided in Section 3.02 hereof.
SECTION 3.05. ORGANIZATION. At every meeting of the Board of
Directors, the Chairman of the Board, or in the case of a vacancy in the office
or absence of the Chairman of the Board, one of the following officers present
in the order stated: the President, the Vice Presidents in their order of rank,
or a chairman chosen by the affirmative vote of the directors holding
two-thirds (2/3) of the votes of the Board of Directors present, shall act as
chairman of the meeting, and the Secretary, or, in the absence of the
Secretary, an Assistant Secretary, if any, or any other person appointed by the
chairman of the meeting, shall act as secretary of the meeting.
SECTION 3.06. PLACE OF MEETING. All meetings of the Board of
Directors of the Corporation shall be held at the principal offices of the
Corporation, or at such other place within or without the State of Delaware as
shall be designated in a notice of such meeting or otherwise.
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SECTION 3.07. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall be
designated from time to time by the Board of Directors. At such meetings, the
directors shall transact such business as may properly be brought before the
meeting.
SECTION 3.08. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held whenever called by the Chairman of the Board, the
President or by the affirmative vote of twenty percent (20%) or more of the
directors then in office. Except as otherwise provided by applicable law, the
Certificate of Incorporation, or these Bylaws, notice of each such meeting
shall be given to each director by telephone or in writing at least three (3)
calendar days (in the case of notice by telephone, telegram, cable, or
facsimile transmission) or seven (7) calendar days (in the case of notice by
mail) before the time at which the meeting is to be held. Each such notice
shall state the time and place of the meeting to be so held, and shall be
deemed to be given at the time when so made by telephone, sent by telegram,
cable, or facsimile transmission, or deposited in the U.S. mail. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at any special meeting.
SECTION 3.09. QUORUM, MANNER OF ACTING, AND ADJOURNMENT. (a) Each
director shall have one (1) vote on any matter voted upon by the Board of
Directors. The voting and other rights of the Corporation's directors and
stockholders are further defined and limited by the Certificate of
Incorporation, the Stockholders Agreement and the Rights Agreement.
(b) Except as otherwise provided by applicable law, the
Certificate of Incorporation, the Stockholders Agreement, the Rights Agreement
or these Bylaws, as amended from time to time, two-thirds (2/3) of the total
number of directors then in office shall constitute a quorum for the
transaction of business at all meetings of the Board of Directors, and the act
of two-thirds (2/3) or more of the directors present at any meeting at which
there is a quorum shall be the act of the Board. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting to another date and time by giving notice to each
director not less than five (5) calendar days before the time at which said
adjourned meeting is to be held, in the manner set forth in Section 3.08
hereof. Following any Qualified Public Offering of the Corporation's stock, a
majority of the total number of directors then in office shall constitute a
quorum for the transaction of business at all meetings of the Board of
Directors, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board.
(c) Notwithstanding paragraph (b) above, (i) the appointment or
removal of the Chairman of the Board or the President; (ii) the approval of
annual business plans, budgets, or strategic plans, (iii) any material change
in the scope of the business of the Corporation; (iv) the approval of policies
concerning the payment of dividends or other distributions; (v) the approval of
capital expenditures in excess of one million dollars ($1,000,000.00); and (vi)
the approval of changes in the Corporation's accounting or tax policies
inconsistent with generally accepted accounting principles shall require the
affirmative vote of three-fourths (3/4) or more of the directors present at any
meeting at which there is a quorum. This Subsection (c) shall terminate upon a
qualified public offering of the Corporation's stock and shall not apply with
respect to any action required to effectuate such public offering.
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SECTION 3.10. CONSENT IN LIEU OF MEETING. Except as otherwise
provided by applicable law, the Certificate of Incorporation, or these Bylaws,
and notwithstanding Section 3.08 hereof, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if all members of the Board or the committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or the committee, as the
case may be.
SECTION 3.11. CONFERENCE TELEPHONE MEETINGS. Except as otherwise
provided by applicable law, the Certificate of Incorporation, or these Bylaws,
one or more directors may participate in a meeting of the Board of Directors,
or of any committee thereof, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
SECTION 3.12. EXECUTIVE AND OTHER COMMITTEES. The Board of
Directors may, by resolution adopted by the affirmative vote of a majority of
the whole Board of Directors, designate and name an Executive Committee and one
or more other committees, each committee to consist of one (1) or more
directors, provided that any Executive Committee shall have at least three (3)
directors. The Board may designate one (1) or more directors as alternate
members of any committee to replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member (and
the alternate or alternates, if any, designated for such member) of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another director to act at the meeting in the
place of any such absent or disqualified member.
Any such committee (to the extent provided in the resolution
establishing such committee) shall conduct itself, including with respect to
provisions for votes of its members, as set forth in resolutions adopted by the
Board of Directors, and shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, expressly including the power and authority to
declare a dividend, to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware General Corporation Law (the "GCL"), and to
authorize the seal of the Corporation to be affixed to all papers which may
require it. Notwithstanding the foregoing, no such committee shall have the
power or authority (a) to amend the Certificate of Incorporation or to fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation, or the conversion into, or the exchange of such shares of any
other class or classes or any other series of the same or any other class or
classes of stock of the Corporation, or to fix the number of shares of any
series of stock, or to authorize the increase or decrease of the shares of any
series; (b) to adopt an agreement of merger or consolidation under Sections 251
or 252 of the GCL; (c) to recommend to the stockholders the sale, lease, or
exchange of all or substantially all of the Corporation's property and assets;
(d) to recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution; (e) to amend the Bylaws of the Corporation; or (f)
to authorize the issuance of stock.
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Each committee designated pursuant to this section shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
SECTION 3.13. COMPENSATION OF DIRECTORS. The Board of Directors
shall have the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor; provided that, the Board, in its discretion,
may reduce the compensation of any director who is concurrently receiving
compensation for services rendered to the Corporation as an officer thereof.
Members of special or standing committees may be paid like compensation for
attending committee meetings.
SECTION 3.14. INTERESTED DIRECTORS. No contract or transaction
between the Corporation and one (1) or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association, or
other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present at
or participates in the meeting of the Board or of a committee thereof which
authorizes the contract or transaction, or solely because his, her or their
votes are counted for such purpose, if:
(a) The material facts as to his or her relationship or
interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or
the committee, and the Board or committee in good
faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested
directors, even though the disinterested directors
comprise less than a quorum;
(b) The material facts as to his or her relationship or
interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the
stockholders; or
(c) the contract or transaction is fair to the
Corporation as of the time it is authorized, approved
or ratified by the Board of Directors, a committee
thereof, or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
ARTICLE IV
NOTICE-WAIVERS
SECTION 4.01. NOTICE. WHAT CONSTITUTES. Except as otherwise
provided in the Bylaws, any provision of applicable law, the Certificate of
Incorporation or these Bylaws which
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requires notice to be given to any director or stockholder of the Corporation
shall not be deemed or constituted to require personal notice (unless otherwise
expressly provided therein), but rather such notice may be given via telephone,
facsimile or first class mail addressed to such director or stockholder at his
or her address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same is deposited in the U.S. mail.
SECTION 4.02. WAIVERS OF NOTICE. Whenever any notice is required to
be given under applicable law, the Certificate of Incorporation or these
Bylaws, a written waiver hereof, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Except as otherwise provided by applicable law, the
Certificate of Incorporation or these Bylaws, neither the business to be
transacted at nor the purposes of, any regular or special meeting of the
stockholders, directors, or a committee of directors need be specified in any
written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting, except when a person
attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting has not been
lawfully called or convened.
Notwithstanding any of the foregoing, except in the case of written
consents of less than all of the stockholders as provided in Section 2.08 of
these Bylaws, no waiver of notice shall be valid or shall be deemed equivalent
to notice unless all directors or stockholders entitled to vote on any matters
which are a subject of the meeting in question shall give such a waiver of
notice, whether before, at or after the meeting.
ARTICLE V
OFFICERS
SECTION 5.01. NUMBER, QUALIFICATIONS AND DESIGNATION. The officers
of the Corporation shall be chosen by the Board of Directors and shall be a
President and a Secretary, and may include one or more Vice Presidents, a
Treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03 of this Article V. One person may hold more than one
(1) office. Except as provided below with respect to the Chairman of the Board,
and Vice Chairmen of the Board, officers may, but need not be, directors or
stockholders of the Corporation. The Board of Directors shall also elect, from
among the members of the Board, a Chairman of the Board, and one or more Vice
Chairmen of the Board, each of which shall be deemed to be an officer of the
Corporation.
SECTION 5.02. ELECTION, TERM OF OFFICE, RESIGNATION, AND REMOVAL.
The officers of the Corporation, except those elected by delegated authority
pursuant to Section 5.03 of this Article V, shall be elected annually by the
Board of Directors, and each such officer shall hold his or her office until
his or her successor shall have been duly elected and qualified, or until his
or her earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Subject to the terms of any
applicable employment or service agreement, all officers, agents, and employees
shall be subject to removal, with or without
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cause, at any time by the Board of Directors. The election or appointment of an
officer shall not of itself create contract rights. Any vacancy caused by the
death, resignation, or removal of any officer, or otherwise, may be filled by
the Board of Directors or pursuant to delegated authority as provided in
Section 5.03 hereof.
SECTION 5.03. OTHER OFFICERS, COMMITTEES, AND AGENTS. The Board of
Directors may from time to time elect such other officers, including Assistant
Secretaries and Assistant Treasurers, and appoint such committees, employees,
or other agents as it deems necessary. Such officers, committee members,
employees, or other agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as are provided in these Bylaws or
as the Board of Directors may from time to time determine by resolution. By
resolution, the Board of Directors may delegate to any officer or committee the
power to elect subordinate officers and to retain or appoint employees or other
agents, or committees thereof, and to prescribe the authority and duties of
such subordinate officers, committees, employees, or other agents. Subject to
the terms of any applicable employment or service agreement, all such
subordinate officers, agents, and employees shall also be subject to removal,
with or without cause, at any time by the officers or committee appointing
them.
SECTION 5.04. THE CHAIRMAN OF THE BOARD. The Chairman of the Board
shall preside at meetings of the Board of Directors and at meetings of the
stockholders. The Chairman of the Board shall counsel with and advise the
President and perform such other duties as may be from time to time assigned to
the Chairman of the Board of Directors. Except as otherwise provided by
resolution of the Board, the Chairman of the Board shall be ex-officio a member
of all committees of the Board.
SECTION 5.05. THE VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of
the Board shall perform the duties of the Chairman of the Board in the
Chairman's absence (in their order of rank) and such other duties as may from
time to time be assigned to them by the Board of Directors, the Chairman of the
Board, or the President.
SECTION 5.06. THE PRESIDENT. The President shall perform all of the
duties usually incident to such office, and such other duties as may from time
to time be assigned to the President by the Board of Directors. In the absence
of the Chairman of the Board and any Vice Chairmen of the Board, the President
shall preside at all meetings of the stockholders and of the Board of
Directors.
SECTION 5.07. THE SECRETARY. The Secretary, or in the Secretary's
absence an Assistant Secretary, (a) shall attend all meetings of the
stockholders and of the Board of Directors and shall record the proceedings of
the meetings of the stockholders and the Board of Directors and of committees
of the Board in a book or books to be kept for that purpose; (b) shall see that
notices are given and records and reports properly kept and filed by the
Corporation as required by law; (c) shall be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on
behalf of the Corporation under its seal; and, (d) in general, shall perform
all duties incident to the office of Secretary, and such other duties as may
from time to time be assigned to the Secretary by the Board of Directors, the
Chairman of the Board, or the President.
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SECTION 5.08. THE TREASURER. The Treasurer, or in Treasurer's
absence, an Assistant Treasurer, (a) shall have or provide for the custody of,
and when proper pay out, disburse, or otherwise dispose of, the funds or other
property of the Corporation; (b) shall collect and receive or provide for the
collection and receipt of moneys earned by or in any manner due to or received
by the Corporation; (c) shall deposit all funds in his custody as Treasurer in
such banks or other places of deposit as the Board of Directors may from time
to time designate; (d) shall keep accurate financial records and accounts and,
whenever so required by the Board of Directors, render statements showing his
transactions as Treasurer and the financial condition of the Corporation; and
(e) in general, shall discharge such other duties as may from time to time by
assigned to the Treasurer by the Board of Directors, the Chairman of the Board,
or the President.
SECTION 5.09. SALARIES. The salaries and other compensation of the
officers and agents of the Corporation elected or appointed by the Board of
Directors shall be fixed from time to time by the Board of Directors. The
salaries and other compensation of subordinate officers appointed pursuant to
delegated authority under Section 5.03 hereof shall be fixed from time to time
by the officers or committee appointing them.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
SECTION 6.01. ISSUANCE. Each stockholder shall be entitled to a
certificate or certificates for shares of stock of the Corporation owned by
such stockholder upon request therefor. The stock certificates of the
Corporation shall be consecutively numbered and shall be registered in the
stock ledger and transfer books of the Corporation as they are issued. They
shall be signed by the Chairman of the Board or by the President or a Vice
President, and by the Secretary or an Assistant Secretary, if any, or by the
Treasurer or an Assistant Treasurer, if any, and shall bear the corporate seal,
which may be a facsimile, engraved, or printed. Any and all of the signatures
upon such certificate may be a facsimile, engraved, or printed. In case any
officer, transfer agent, or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent, or registrar before the certificate is issued, it
may be issued with the same effect as if such person were such officer,
transfer agent, or registrar at the date of its issue.
SECTION 6.02. RESTRICTION ON TRANSFER. No stockholder shall sell,
transfer, or otherwise dispose of such stockholder's shares of stock without
first offering said shares to the Corporation if and to the extent required by
the terms of the Stockholders Agreement or the Rights Agreement. This Section
6.02 shall terminate upon a Qualified Public Offering of the Corporation's
stock.
SECTION 6.03 TRANSFER, LEGENDS, ETC. Upon surrender to the
Corporation or the transfer agent of the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession,
assignation, or authority to transfer the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books. The Board of Directors may by
resolution, (a) impose restrictions on transfer or registration of transfer of
shares of stock of the Corporation, and (b) require as
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a condition to the issuance or transfer of such shares that the person or
persons to whom such shares are to be issued or transferred agree in writing to
such restrictions. In the event that any such restrictions on transfer or
registration of transfer are so imposed, the Corporation shall require that
such restrictions be conspicuously noted on all certificates representing such
shares. In addition, all shares of the Corporation's stock are subject to
several restrictions and limitations as set forth in the Stockholders Agreement
and the Rights Agreement, which are to be noted on all certificates
representing such shares.
SECTION 6.04. LOST, STOLEN, DEFACED, WORN OUT, OR DESTROYED. The
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen, defaced, worn-out, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, defaced, worn out, or destroyed. When authorizing
such issuance of a new certificate or certificates, the Corporation may, as a
condition precedent thereto, (a) require the owner of any defaced or worn out
certificate to deliver such certificate to the Corporation and order the
cancellation of the same, and (b) require the owner of any lost, stolen or
destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as the Corporation shall require and to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen, or destroyed. Thereupon, the Corporation may
cause to be issued to such person a new certificate in replacement for the
certificate alleged to have been lost, stolen, defaced, worn out, or destroyed.
Upon the stub of every new certificate so issued shall be noted the fact of
such issue and the number, date, and name of the registered owner of the lost,
stolen, defaced, worn out, or destroyed certificate in lieu of which the new
certificate is issued. Every certificate issued hereunder shall be issued
without payment to the Corporation for such certificate; provided that, there
shall be paid to the Corporation a sum equal to any exceptional expenses
incurred by the Corporation in providing for or obtaining any such indemnity
and security as is referred to herein.
SECTION 6.05. RECORD HOLDER OF SHARES. Except as otherwise provided
by applicable law, the Certificate of Incorporation, or these Bylaws, the
Corporation (a) shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote
as such owner, (b) shall be entitled to hold liable for any required calls and
assessments a person so registered, and (c) shall not be bound to recognize (i)
any entity or person as a transferee of stock unless such entity or person both
complies with all transfer and other restriction imposed hereby or by the
Certificate of Incorporation and Stockholders Agreement and first becomes a
party to Stockholders Agreement, or (ii) any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof.
The Corporation may treat a fiduciary as having capability and
authority to exercise all rights of ownership in respect of shares of record in
the name of a decedent holder, a person, firm, or corporation in conservation,
receivership, or bankruptcy, a minor, an incompetent person, or a person under
disability, as the case may be, for whom such fiduciary is acting, and the
Corporation, its transfer agent, and its registrar, if any, upon presentation
of evidence of appointment of such fiduciary shall be under no duty to inquire
as to the powers of such
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fiduciary and shall not be liable for any loss caused by any act done or
omitted to be done by the Corporation or its transfer agent or registrar, if
any, in reliance thereon.
SECTION 6.06. DETERMINATION OF STOCKHOLDERS OF RECORD. In order
that the Corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to
receive payments of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than (10) calendar days before the date of
such meeting, nor more than sixty (60) calendar days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next
preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled
to consent to corporate action in writing without a
meeting, when no prior action by the Board of
Directors is necessary, shall be the first date on
which a signed written consent setting forth the
action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office
in Delaware, its principal place of business, or an
officer or agent of the Corporation having custody of
the book in which proceedings of meetings of
stockholders are recorded.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on
the day on which the Board of Directors adopts the
resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting provided
that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 6.07. APPOINTMENT OF TRANSFER AGENTS, REGISTRARS, ETC. The
Board of Directors may from time to time by resolution appoint (a) one (1) or
more transfer agents and registrars for the shares of stock of the Corporation,
(b) a plan agent to administer any employee benefit, dividend reinvestment, or
similar plan of the Corporation, and (c) a dividend disbursing agent to
disburse any and all dividends authorized by the Board and payable with respect
to the shares of stock of the Corporation. The Board of Directors shall also
have authority to make such other rules and regulations not inconsistent with
applicable law, the Certificate of Incorporation, or these Bylaws, as it deems
necessary or advisable with respect to the issuance, transfer, and registration
of certificates for shares and the shares of stock represented thereby.
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ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. DIVIDENDS. Dividends, if any, upon the capital stock
of the Corporation may be declared only by the affirmative vote of at least
three-fourths (3/4) of the members of the Board of Directors then in office, at
any regular or special meeting of the Board of Directors. Dividends may be paid
in cash, in property, or in shares of the capital stock of the Corporation, or
in any combination thereof, but only out of funds available for the payment of
dividends as provided by applicable law. Any dividends declared upon the stock
of the Corporation shall be payable on such date or dates as the Board of
Directors shall determine by resolution. If the date fixed for the payment of
any dividend shall in any year fall upon a legal holiday, then the dividend
payable on such date shall be paid on the next day not a legal holiday.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its discretion, shall determine by
resolution is proper as a reserve or reserves to meet contingencies, for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall so
determine is in the best interests of the Corporation and its stockholders. The
Board may modify or abolish any such reserves in the manner in which it was
created.
SECTION 7.02. CONTRACTS, ETC. Except as otherwise provided by
applicable law, the Certificate of Incorporation, or these Bylaws, the Board of
Directors may authorize any officer or officers, any employee or employees, or
any agent or agents, to enter into any contract or to execute, acknowledge, or
deliver any agreement, deed, mortgage, bond, or other instrument in the name of
and on behalf of the Corporation and to affix the Corporation's seal thereon.
Such authority may be general or confined to specific instances.
SECTION 7.03. CHECKS. All checks, notes, obligations, bills of
exchange, acceptances, or other orders in writing shall be signed by such
person or persons as the Board of Directors may from time to time designate by
resolution.
SECTION 7.04. CORPORATE SEAL. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization,
and the words "Corporate Seal, Delaware." The seal may be used by causing it or
a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
SECTION 7.05. DEPOSITS. All funds of the Corporation shall be
deposited from time to time to credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks or other
orders signed by such one or more officers, employees, or agents as the Board
of Directors shall from time to time designate.
SECTION 7.06. EXAMINATION OF CORPORATE RECORDS. Upon written demand
under oath stating the purpose thereof, every stockholder of record shall have
a right to examine, in person or by attorney or other agent, during ordinary
business hours and for any proper purpose,
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<PAGE> 17
the Corporation's stock ledger, a list of its stockholders, and its other books
and records and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder.
In every instance where an attorney or other agent shall be the person who
seeks the right of inspection, the demand under oath shall be accompanied by a
power of attorney or other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be directed
to the Corporation as its registered office in Delaware or at its principal
place of business.
Any director shall have the right to examine the Corporation's stock
ledger, a list of its stockholders, and its other books and records during
ordinary business hours for a purpose reasonably related to his or her position
as a director.
SECTION 7.07. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The
Corporation shall indemnify to the fullest extent authorized or permitted by
law any current or former director or officer of the Corporation (or his or her
testator or estate) made or threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether criminal, civil
administrative, or investigative, by reason of the fact that he or she is or
was a director or officer of the Corporation or is or was serving, at the
request of the Corporation, as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise. Subject to applicable law, the Corporation may indemnify
an employee or agent of the Corporation to the extent that and with respect to
such proceedings as, the Board of Directors may determine by resolution, in its
discretion.
SECTION 7.08. AMENDMENT OF BYLAWS. (a) These Bylaws may be amended,
modified, or repealed, or new Bylaws may be adopted by the Board of Directors
of the Corporation, subject to (i) the consent of the holders of Series A
Preferred as provided in the Rights Agreement and (ii) amendment, modification
or repeal, by the Corporation's stockholders. Any such amendment, modification
or repeal by the Corporation's stockholders shall require, in addition to all
applicable requirements of law and the Certificate of Incorporation, the
affirmative vote of the record holders of two-thirds (2/3) or more of the
outstanding shares of Common Stock, at any annual meeting of stockholders or at
any special meeting thereof, if notice of such amendment, modification, repeal
or adoption of new Bylaws is contained in the notice of such special meeting.
Notwithstanding any of the foregoing to the contrary, Section 2.01 (c) hereof
may not be amended, modified or repealed by either the Board of Directors or
the stockholders without the unanimous vote of all holders of record of stock.
(b) Notwithstanding the above paragraph, this paragraph (b) of
Section 7.08 and paragraph (c) of Section 3.09 may only be amended, modified,
or repealed by the Board of Directors of the Corporation with the affirmative
vote of three-fourths (3/4) or more of the Board of Directors at any meeting of
the Board at which there is a quorum.
(c) Following a Qualified Public Offering of the Corporation's
stock, these Bylaws may be amended, modified, or repealed, or new Bylaws may be
adopted by the Board of Directors of the Corporation, subject to amendment,
modification or repeal by the Corporation's stockholders and applicable law.
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<PAGE> 1
EXHIBIT 3.3
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF PEGASUS SYSTEMS, INC.
This Second Amended and Restated Certificate of Incorporation amends and
restates the Amended and Restated Certificate of Incorporation filed in the
office of the Secretary of State of the State of Delaware on June 25, 1996,
which amended and restated the Certificate of Incorporation of Pegasus Systems,
Inc., a corporation originally incorporated in Delaware as "Pegasus Systems,
Inc." on July 10, 1995. This Second Amended and Restated Certificate of
Incorporation has been duly adopted pursuant to Section 245 of the Delaware
General Corporation Law,
ARTICLE I
The name of this corporation is Pegasus Systems, Inc. (the "Corporation").
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 1013 Centre Road, New Castle County, Wilmington, Delaware
19805-1297, The name of the registered agent of the Corporation at that address
is The Prentice-Hall Corporation Systems, Inc.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful business, act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatsoever.
ARTICLE IV
This Corporation is authorized to issue two classes of stock, designated
"Common Stock" and "Preferred Stock". The total number of shares which this
Corporation is authorized to issue is 102,000,000 shares. The number of shares
of Common Stock which this Corporation is authorized to issue is 100,000,000
shares, par value $0.01 per share. The number of shares of Preferred Stock
which this Corporation is authorized to issue is 2,000,000 shares, par value
$0.01 per share, which shall initially be undesignated as to series.
Any Preferred Stock not previously designated as to series may be issued
from time to time in one or more series pursuant to a resolution or resolutions
providing for such issue duly adopted by the Board of Directors (authority to
do so being hereby expressly
<PAGE> 2
vested in the Board), and such resolution or resolutions shall also set forth
the voting powers, full or limited or none, of each such series of Preferred
Stock and shall fix the designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of each such series of Preferred Stock. The Board of Directors is
authorized to alter the designation, rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series of Preferred Stock, to increase or decrease (but not
below the number of shares of any such series then outstanding) the number of
shares of any such series subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired by
the Corporation (whether by redemption, repurchase, conversion to Common Stock
or other means), shall upon such reacquisition resume the status of authorized
and unissued shares of Preferred Stock, undesignated as to series and available
for designation and issuance by the Corporation in accordance with the
immediately preceding paragraph.
The relative rights, preferences, privileges and restrictions granted to
or imposed upon the Common Stock or the holders thereof are as follows:
(a) Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
(b) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, after
payment or provision for payment of the debts and other liabilities of the
Corporation and of any amounts to which the holders of all classes of stock at
the time outstanding having prior rights as to liquidation are entitled, the
holders of all outstanding shares of Common Stock shall be entitled to share
ratably in the remaining assets of the Corporation.
(c) Redemption. The Common Stock is not redeemable.
(d) Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any
shareholders' meeting in accordance with the Bylaws of this Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
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<PAGE> 3
(e) Residual Rights. All rights accruing to the outstanding shares of
this Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
Elections of directors need not be by written ballot unless a stockholder
demands election by written ballot at the meeting and before voting begins or
unless the Bylaws of the Corporation shall so provide.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized to make,
alter, amend or repeal the Bylaws of the Corporation.
ARTICLE VIII
(a) To the fullest extent permitted by the General Corporation Law of
the State of Delaware as the same exists or as may hereafter be amended, a
director of the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director.
(b) The Corporation may indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his estate or legal representative is or was a director,
officer, employee or agent of the Corporation or any predecessor of the
Corporation or serves or served at any other enterprise as a director, officer,
employee or agent at the request of the Corporation or any other predecessor to
the Corporation.
(c) No amendment nor repeal of this Article VIII, nor the adoption of
any provision of this Corporation's Certificate of Incorporation inconsistent
with this Article VIII, shall eliminate or reduce the effect of this Article
VIII, in respect of any matter occurring, or any action or proceeding accruing
or arising or that, but for this Article VIII, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.
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<PAGE> 4
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE X
Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided
in the Bylaws of the Corporation.
ARTICLE XI
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. The Board of Directors may exercise
all such authority and powers of the Corporation and do all such lawful acts
and things as are not by statute or this Certificate of Incorporation directed
or required to be exercised or done by the stockholders.
1. Number of Directors
The number of directors of the Corporation shall be fixed from time to
time only by action of not less than a majority of the members of the Board of
Directors then in office. The number of directors comprising the Board of
Directors of the Corporation shall not be less than two (2) or more than
twenty-five (25).
2. Classes
Subject to the rights, if any, of any series of Preferred Stock then
outstanding, the directors shall be divided into three classes, designated
Class I, Class II and Class III. The number of directors in each class shall be
the whole number contained in the quotient arrived at by dividing the
authorized number of directors by three, and if a fraction is also contained in
such quotient then if such fraction is one-third (1/3) the extra director shall
be a member of Class III and if the fraction is two-thirds (2/3) then one of
the extra directors shall be a member of Class III and the other shall be a
member of Class II. Upon filing of this Second Amended and Restated Certificate
of Incorporation with the Secretary of State of the State of Delaware, Donald
R. Dixon, John Biggs and W.C. Hammett, Jr. shall be members of Class I, Malcolm
Highet, Bruce W. Wolff and Mark C. Wells shall be members of Class II, and
Rockwell A. Schnabel, John F. Davis, III and Paul Travers shall be
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<PAGE> 5
members of Class III. The term of office of directors in each class shall
expire as follows: Class I shall expire at the 1998 annual meeting of
stockholders, Class II shall expire at the 1999 annual meeting of stockholders,
Class III shall expire at the 2000 annual meeting of stockholders. At each such
meeting of stockholders, directors shall be elected to succeed those directors
whose terms expire for a term of office to expire at the third succeeding
annual meeting of stockholders after their election. All directors shall hold
office until the annual meeting of stockholders for the year in which their
term expires and until their successors are duly elected and qualified, or
until their earlier death, resignation, disqualification or removal.
3. Vacancies
Subject to the rights, if any, of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, disqualification or removal may be
filled only by a majority vote of the directors then in office, though less
than a quorum, and directors so chosen shall hold office for a term expiring at
the annual meeting of stockholders at which the term of office of the class to
which they have been elected expires and until such director's successor shall
have been duly elected and qualified.
4. Removal
Any director or the entire Board of Directors may be removed only for
cause and only by the vote of the holders of two-thirds (2/3) of the securities
of the Corporation then entitled to vote at an election of directors voting
together as a single class.
ARTICLE XII
Any action required or permitted to be taken at any annual or special
meeting of stockholders may only be taken upon the vote of the stockholders at
an annual or special meeting duly called and may not be taken by written
consent of the stockholders. Special meetings of the stockholders, unless
otherwise prescribed by statute, may be called at any time only by the Chairman
of the Board or the Chief Executive Officer of the Corporation or the Board of
Directors.
ARTICLE XIII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation. In addition to any affirmative
vote required by applicable law or any other provision of this Certificate of
Incorporation or specified in any agreement, the affirmative
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<PAGE> 6
EXHIBIT 3.3
vote of the holders of not less than two-thirds (2/3) of the voting power of
all securities of the Corporation entitled to vote generally in the election of
directors shall be required to amend, add, alter, change, repeal or adopt any
provisions inconsistent with Sections 1, 2 or 3 of Article XI, Article XII or
this Article XIII of this Certificate of Incorporation and the affirmative vote
of not less than eighty percent (80%) of the voting power of all securities of
the Corporation entitled to vote generally in the election of directors shall
be required to amend, add, alter, change, repeal or adopt any provisions
inconsistent with Section 4 of Article XI or this Article XIII with respect to
Section 4 of Article XI.
IN WITNESS WHEREOF, the Corporation has caused this Second Amended and
Restated of Certificate to be duly executed this ____ day of ___________, 1997.
By: /s/ JOHN F. DAVIS, III
--------------------------------------
John F. Davis, III
President and Chief Executive Officer
ATTEST:
/s/ RIC L. FLOYD
- -----------------------------------
Ric L. Floyd, Secretary
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<PAGE> 1
EXHIBIT 3.4
SECOND AMENDED AND RESTATED BYLAWS
OF
PEGASUS SYSTEMS, INC.
(A DELAWARE CORPORATION)
ARTICLE I.
OFFICES AND FISCAL YEAR
SECTION 1.1 REGISTERED OFFICE. The registered office of the Corporation
shall be as stated in the Certificate of Incorporation until a change in such
office is established by resolution of the Board of Directors and a statement
of such change is filed in the manner provided by applicable law.
SECTION 1.2 OTHER OFFICES. The Corporation may also have offices and keep
its books, documents, and records at such other places within or without the
State of Delaware as the Board of Directors may from time to time determine or
the business of the Corporation may require.
SECTION 1.3 FISCAL YEAR. The fiscal year of the Corporation shall end on
the 31st day of December in each year or on such other date as the Board of
Directors may designate by resolution.
ARTICLE II.
THE STOCKHOLDERS
SECTION 2.1 TYPES OF STOCK.
(a) The Corporation's Certificate of Incorporation, as amended (the
"Certificate of Incorporation") currently authorizes two classes of capital
stock - Common Stock and Preferred Stock. The aggregate number of shares of
Common Stock and Series A Preferred which the Corporation has authority to
issue is set forth in the Certificate of Incorporation.
(b) Except as provided herein or in the Certificate of Incorporation,
or except as may be provided by the laws of the State of Delaware, the holders
of Common Stock shall have exclusively all rights of stockholders.
SECTION 2.2 PLACE OF MEETING; ANNUAL MEETING. All meetings of the
stockholders of the Corporation shall be held at the principal offices of the
Corporation, or
<PAGE> 2
at such other place within or without the State of Delaware as shall be
designated by the Board of Directors in the notice of such meeting. The Board
of Directors may fix by resolution the date and time of the annual meeting of
the stockholders, and at said meeting the stockholders then entitled to vote
shall elect directors to serve until the next annual meeting of stockholders
and until their successors are duly nominated, qualified and elected, and shall
transact such other business as may properly be brought before the meeting.
SECTION 1.023 SPECIAL MEETINGS. Except as otherwise provided by applicable
law, the Certificate of Incorporation, or these Bylaws, a special meeting of
the stockholders of the Corporation entitled to vote may be called at any time
only by the Chairman of the Board or the President of the Corporation or the
Board of Directors.
SECTION 1.024 NOTICE OF MEETINGS. Unless otherwise provided by applicable
law, the Certificate of Incorporation, or these Bylaws, written notice of the
place, date, and hour of every meeting of the stockholders, whether annual or
special, shall be given to each stockholder of record entitled to vote at the
meeting at the address of such stockholder as it appears on the records of the
Corporation, not less than ten (10) nor more than sixty (60) calendar days
before the date of the meeting. Every notice of a special meeting shall state
the purpose or purposes thereof.
SECTION 1.025 QUORUM. MANNER OF ACTING AND ADJOURNMENT. (a) Except as
otherwise provided by the Certificate of Incorporation or these Bylaws, the
record holders of at least a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote thereat, must be
present in person or represented by proxy to constitute a quorum at any annual
or special meeting of the stockholders. Whether or not a quorum is present or
represented at any meeting of the stockholders, the record holders of a
majority of the shares of capital stock present or so represented shall have
the power to adjourn the meeting from time to time. When a meeting is adjourned
to another time or place, no notice need be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the
adjournment is taken. At any adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting. If an adjournment is for more than thirty
(30) calendar days, or if after an adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting. Except as
otherwise provided by applicable law, the Certificate of Incorporation or these
Bylaws, the affirmative vote of the record holders of a majority of the shares
of capital stock of the Corporation present in person or represented by proxy
and entitled to vote on the subject matter at a meeting duly called and held
with the necessary quorum, shall be the act of the stockholders at any annual
or special meeting of stockholders. Except as otherwise required by applicable
law or provided by the Certificate of Incorporation or these Bylaws, the
stockholders present in person or by proxy at a meeting duly called and held
can continue to do business with respect to any matters properly brought before
the meeting,
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<PAGE> 3
until adjournment, notwithstanding withdrawal of enough stockholders to leave
less than a quorum.
(b) Shares of its own capital stock belonging to the Corporation, or
to another corporation if a majority of the shares entitled to vote in the
election of directors of such other corporation is held directly or indirectly
by the Corporation, shall not be entitled to vote and shall not be counted for
quorum purposes.
SECTION 1.026 ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, or in the case of a vacancy in the office or absence of
the Chairman of the Board, one of the following persons present in the order
stated: the Vice Chairmen in their order of rank, the President, the
Vice-Presidents in their order of rank, a chairman designated by the Board of
Directors, or a chairman chosen by the stockholders entitled to cast two-thirds
(2/3) of the votes that all stockholders present in person or by proxy are
entitled to cast, shall act as chairman of the meeting, and the Secretary, or,
in such person's absence, an Assistant Secretary, if any, or any person
appointed by the chairman of the meeting, shall act as secretary of the
meeting.
SECTION 1.027 PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy, but no such proxy shall be voted or acted upon after
three (3) years from its date, unless the proxy provides for a longer period.
Every proxy shall be executed in writing by the stockholder, or by the
stockholder's duly authorized attorney-in-fact, and shall be delivered to the
secretary of the meeting at or prior to the time designated in the order of
business for so delivering such proxies. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
A proxy may be made irrevocable regardless of whether the interest with which
it is coupled is an interest in the stock itself or an interest in the
Corporation generally.
SECTION 1.028 CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at any annual or special meeting of
stockholders may only be taken upon the vote of the stockholders at an annual
or special meeting duly called and may not be taken by written consent of the
stockholders.
SECTION 1.029 VOTING LISTS. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten (10) calendar days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting. The list shall be arranged in alphabetical
order showing the address of each stockholder and the number of shares
registered in the name of such stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least (10) calendar days prior to
the meeting, either at a place within the city where the
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<PAGE> 4
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger of the Corporation shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list
required by this section, or the books of the Corporation or are entitled to
vote in person or by proxy at any annual or special meeting of the
stockholders.
SECTION 1.0210 VOTING PROCEDURES; JUDGES OF ELECTION. Except as otherwise
provided by applicable law, the Certificate of Incorporation, or these Bylaws,
or as directed by the chairman of the meeting, the election of directors and
the vote upon any other matter need not be by written ballot. In advance of any
meeting of stockholders, the Board of Directors may appoint one or more judges
of election, who need not be stockholders, to act at such meeting or any
adjournment thereof. If judges of election are not so appointed, the chairman
of any such meeting may, and, upon the demand of any stockholder entitled to
vote or such stockholder's proxy, at the meeting and before voting begins,
shall appoint judges of election. In the case of judges appointed upon demand
of a stockholder, the number of judges shall be either one (1) or three (3), as
determined by the stockholders present or represented by proxy, entitled to
cast a majority of votes that all stockholders present or so represented are
entitled to cast thereon. No person who is a candidate for office shall act as
a judge. In case any person appointed as judge fails to appear or refuses to
act, the vacancy may be filled by appointment made by the Board of Directors in
advance of the convening of the meeting, or at the meeting by the chairman of
the meeting.
Except as provided in the Certificate of Incorporation, if judges of
election are appointed as aforesaid, they shall (a) determine the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity, and effect
of proxies; (b) receive votes or ballots; (c) hear and determine all challenges
and questions in any way arising in connection with the right to vote; (d)
count and tabulate all votes; (e) determine the results of the election or
other vote; and (f) do such acts as may be proper to conduct the election or
vote with fairness to all stockholders. If there be three (3) or more judges of
election, the decision, act, or certificate of a majority shall be effective in
all respects as the decision, act, or certificate of all.
On request of the chairman of the meeting or of any stockholder entitled
to vote or such stockholder's proxy, the judges shall make a report in writing
of any challenge, question, or other matter determined by them, and shall
execute a certificate of any fact found by them.
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ARTICLE III.
BOARD OF DIRECTORS
SECTION 1.031 POWERS. The Board of Directors shall have full power to
manage the business and affairs of the Corporation, and all powers of the
Corporation, except those specifically reserved or granted to the stockholders
by applicable law, the Certificate of Incorporation, these Bylaws, or that
certain Rights Agreement dated as of June 25, 1996 to which the Corporation is
a party (as it may be amended, the "Rights Agreement"), are hereby granted to
and vested in the Board of Directors. Without limiting the foregoing, the Board
of Directors may, if it so desires, appoint one or more advisory councils to
the Board of Directors, consisting of such numbers and with such duties as the
Board may deem appropriate.
SECTION 1.032 NUMBER, NOMINATIONS, ELECTION, TERM OF OFFICE, REMOVAL,
TERMINATION AND VACANCIES.
1. Number of Directors. The number of directors of the Corporation
shall be fixed from time to time only by action of not less than a
majority of the members of the Board of Directors then in office. The
number of directors comprising the Board of Directors of the Corporation
shall not be less than two (2) or more than twenty-five (25).
2. Classes. Subject to the rights, if any, of any series of Preferred
Stock then outstanding, the directors shall be divided into three classes,
designated Class I, Class II and Class III. The number of directors in
each class shall be the whole number contained in the quotient arrived at
by dividing the authorized number of directors by three, and if a fraction
is also contained in such quotient then if such fraction is one-third
(1/3) the extra director shall be a member of Class III and if the
fraction is two-thirds (2/3) then one of the extra directors shall be a
member of Class III and the other shall be a member of Class II. Upon
filing of the Corporation's Second Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, Donald
R. Dixon, John Biggs and W.C. Hammett, Jr. shall be members of Class I,
Malcolm Highet, Bruce W. Wolff and Mark C. Wells shall be members of Class
II, and Rockwell A. Schnabel, John F. Davis, III and Paul Travers shall be
members of Class III. The term of office of directors in each class shall
expire as follows: Class I shall expire at the 1998 annual meeting of
stockholders, Class II shall expire at the 1999 annual meeting of
stockholders, Class III shall expire at the 2000 annual meeting of
stockholders. At each such meeting of stockholders, directors shall be
elected to succeed those directors whose terms expire for a term of office
to expire at the third succeeding annual meeting of stockholders after
their election. All directors shall hold office until the annual meeting
of stockholders for the year in which their term expires and until their
successors are duly elected and qualified, or until their earlier death,
resignation, disqualification or removal.
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3. Vacancies. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
disqualification or removal may be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which they have
been elected expires and until such director's successor shall have been
duly elected and qualified.
4. Removal. Any director or the entire Board of Directors may be
removed only for cause and only by the vote of the holders of two-thirds
(2/3) of the securities of the Corporation then entitled to vote at an
election of directors voting together as a single class.
SECTION 1.033 QUALIFICATIONS. All directors of the Corporation shall be
natural persons, but need not be residents of Delaware or stockholders of the
Corporation.
SECTION 1.034 RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, the President,
or the Secretary of the Corporation. Such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective. Upon the effectiveness of such
resignation, the vacancy created thereby shall be filled in the manner provided
in Section 3.2 hereof.
SECTION 1.035 ORGANIZATION. At every meeting of the Board of Directors,
the Chairman of the Board, or in the case of a vacancy in the office or absence
of the Chairman of the Board, one of the following officers present in the
order stated: the President, the Vice Presidents in their order of rank, or a
chairman chosen by the affirmative vote of the directors holding two-thirds
(2/3) of the votes of the Board of Directors present, shall act as chairman of
the meeting, and the Secretary, or, in the absence of the Secretary, an
Assistant Secretary, if any, or any other person appointed by the chairman of
the meeting, shall act as secretary of the meeting.
SECTION 1.036 PLACE OF MEETING. All meetings of the Board of Directors of
the Corporation shall be held at the principal offices of the Corporation, or
at such other place within or without the State of Delaware as shall be
designated in a notice of such meeting or otherwise.
SECTION 1.037 ANNUAL AND REGULAR MEETINGS. The Board of Directors shall
meet for the purpose of organization, the election of officers and the
transaction of other business, as soon as practicable after each annual meeting
of stockholders, on the same day and at the same place where such annual
meeting shall be held. Notice of such meeting need not be given. If such annual
meeting is not so held, then the annual meeting
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of the Board of Directors may be held at such other time or place (within
or without the State of Delaware) as shall be specified in a notice thereof
given as required herein. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall be designated from time to
time by the Board of Directors. At such regular meetings, the directors shall
transact such business as may properly be brought before the meeting. Notice of
regular meetings of the Board of Directors need not be given except as
otherwise required by applicable law or these Bylaws.
SECTION 1.038 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held whenever called by the Chairman of the Board, the President or by
the affirmative vote of twenty percent (20%) or more of the directors then in
office. Except as otherwise provided by applicable law, the Certificate of
Incorporation, or these Bylaws, notice of each such meeting shall be given to
each director by telephone or in writing at least three (3) calendar days (in
the case of notice by telephone, telegram, cable, or facsimile transmission) or
seven (7) calendar days (in the case of notice by mail) before the time at
which the meeting is to be held. Each such notice shall state the time and
place of the meeting to be so held, and shall be deemed to be given at the time
when so made by telephone, sent by telegram, cable, or facsimile transmission,
or deposited in the U.S. mail. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at any special meeting.
SECTION 1.039 QUORUM, MANNER OF ACTING, AND ADJOURNMENT. (a) Each director
shall have one (1) vote on any matter voted upon by the Board of Directors. The
voting and other rights of the Corporation's directors and stockholders are
further defined and limited by the Certificate of Incorporation and the Rights
Agreement.
(b) Except as otherwise provided by applicable law, the Certificate
of Incorporation, the Rights Agreement or these Bylaws, as amended from time to
time, a majority of the total number of directors then in office shall
constitute a quorum for the transaction of business at all meetings of the
Board of Directors, and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting to another date and time by giving
notice to each director not less than five (5) calendar days before the time at
which said adjourned meeting is to be held, in the manner set forth in Section
3.8 hereof. At any adjourned meeting at which a quorum is present, any business
may be transacted that might have been transacted at the meeting as originally
called.
SECTION 1.0310 CONSENT IN LIEU OF MEETING. Except as otherwise provided by
applicable law, the Certificate of Incorporation, or these Bylaws, and
notwithstanding Section 3.8 hereof, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if all members of the Board or the committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or the committee, as the
case may be.
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SECTION 1.0311 CONFERENCE TELEPHONE MEETINGS. Except as otherwise
provided by applicable law, the Certificate of Incorporation, or these Bylaws,
one or more directors may participate in a meeting of the Board of Directors,
or of any committee thereof, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting.
SECTION 1.0312 EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may,
by resolution adopted by the affirmative vote of a majority of the whole Board
of Directors, designate and name an Executive Committee and one or more other
committees, each committee to consist of one (1) or more directors, provided
that any Executive Committee shall have at least three (3) directors. The Board
may designate one (1) or more directors as alternate members of any committee
to replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member (and the alternate or
alternates, if any, designated for such member) of any committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another director to act at the meeting in the place of any such absent
or disqualified member.
Any such committee (to the extent provided in the resolution establishing
such committee) shall conduct itself, including with respect to provisions for
votes of its members, as set forth in resolutions adopted by the Board of
Directors, and shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, expressly including the power and authority to declare a dividend,
to adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware General Corporation Law (the "GCL"), and to authorize the seal of the
Corporation to be affixed to all papers which may require it.
Each committee designated pursuant to this section shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
SECTION 1.0313 COMPENSATION OF DIRECTORS. The Board of Directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor; provided that, the Board, in its discretion,
may reduce the compensation of any director who is concurrently receiving
compensation for services rendered to the Corporation as an officer thereof.
Members of special or standing committees may be paid like compensation for
attending committee meetings.
SECTION 1.0314 INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one (1) or more of its directors or officers, or between
the Corporation and
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any other corporation, partnership, association, or other organization in which
one or more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board or of a committee thereof which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if:
(a) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board or
committee in good faith authorizes the contract or transaction
by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors comprise less
than a quorum;
(b) The material facts as to his or her relationship or interest and
as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of
the stockholders; or
(c) the contract or transaction is fair to the Corporation as of the
time it is authorized, approved or ratified by the Board of
Directors, a committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
ARTICLE IV.
NOTICE-WAIVERS
SECTION 1.041 NOTICE. WHAT CONSTITUTES. Except as otherwise provided by
applicable law, the Certificate of Incorporation or the Bylaws, any provision
of applicable law, the Certificate of Incorporation or these Bylaws which
requires notice to be given to any director or stockholder of the Corporation
shall not be deemed or constituted to require personal notice (unless otherwise
expressly provided therein), but rather such notice may be given via telephone,
facsimile or first class mail addressed to such director or stockholder at his
or her address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same is deposited in the U.S. mail.
SECTION 1.042 WAIVERS OF NOTICE. Whenever any notice is required to be
given under applicable law, the Certificate of Incorporation or these Bylaws, a
written waiver thereof, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Except as otherwise
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provided by applicable law, the Certificate of Incorporation or these Bylaws,
neither the business to be transacted at nor the purposes of, any regular or
special meeting of the stockholders, directors, or a committee of directors
need be specified in any written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting shall
constitute a waiver of notice of such meeting, except when a person attends a
meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting has not been lawfully
called or convened.
ARTICLE V.
OFFICERS
SECTION 1.051 NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a President
and a Secretary, and may include one or more Vice Presidents, a Treasurer, and
such other officers as may be elected in accordance with the provisions of
Section 5.3 of this Article V. One person may hold more than one (1) office.
Except as provided below with respect to the Chairman of the Board, and Vice
Chairmen of the Board, officers may, but need not be, directors or stockholders
of the Corporation. The Board of Directors shall also elect, from among the
members of the Board, a Chairman of the Board, and one or more Vice Chairmen of
the Board, each of which shall be deemed to be an officer of the Corporation.
SECTION 1.052 ELECTION, TERM OF OFFICE, RESIGNATION, AND REMOVAL. The
officers of the Corporation, except those elected by delegated authority
pursuant to Section 5.3 of this Article V, shall be elected annually by the
Board of Directors, and each such officer shall hold his or her office until
his or her successor shall have been duly elected and qualified, or until his
or her earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Subject to the terms of any
applicable employment or service agreement, all officers, agents, and employees
shall be subject to removal, with or without cause, at any time by the Board of
Directors [, the Chairman of the Board or the President]. The election or
appointment of an officer shall not of itself create contract rights. Any
vacancy caused by the death, resignation, or removal of any officer, or
otherwise, may be filled by the Board of Directors or pursuant to delegated
authority as provided in Section 5.3 hereof.
SECTION 1.053 OTHER OFFICERS, COMMITTEES, AND AGENTS. The Board of
Directors may from time to time elect such other officers, including Assistant
Secretaries and Assistant Treasurers, and appoint such committees, employees,
or other agents as it deems necessary. Such officers, committee members,
employees, or other agents shall hold their offices for such terms and shall
exercise such powers and perform such duties as are provided in these Bylaws or
as the Board of Directors may from time to time determine by resolution. By
resolution, the Board of Directors may delegate to any officer or committee the
power to elect subordinate officers and to retain or appoint employees
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or other agents, or committees thereof, and to prescribe the authority and
duties of such subordinate officers, committees, employees, or other agents.
Subject to the terms of any applicable employment or service agreement, all
such subordinate officers, agents, and employees shall also be subject to
removal, with or without cause, at any time by the officers or committee
appointing them.
SECTION 1.054 THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at meetings of the Board of Directors and at meetings of the
stockholders. The Chairman of the Board shall counsel with and advise the
President and perform such other duties as may be from time to time assigned to
the Chairman of the Board of Directors. Except as otherwise provided by
resolution of the Board, the Chairman of the Board shall be ex-officio a member
of all committees of the Board.
SECTION 1.055 THE VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of the
Board shall perform the duties of the Chairman of the Board in the Chairman's
absence (in their order of rank) and such other duties as may from time to time
be assigned to them by the Board of Directors, the Chairman of the Board, or
the President.
SECTION 1.056 THE PRESIDENT. The President shall perform all of the duties
usually incident to such office, and such other duties as may from time to time
be assigned to the President by the Board of Directors. In the absence of the
Chairman of the Board and any Vice Chairmen of the Board, the President shall
preside at all meetings of the stockholders and of the Board of Directors.
SECTION 1.057 THE SECRETARY. The Secretary, or in the Secretary's absence
an Assistant Secretary, (a) shall attend all meetings of the stockholders and
of the Board of Directors and shall record the proceedings of the meetings of
the stockholders and the Board of Directors and of committees of the Board in a
book or books to be kept for that purpose; (b) shall see that notices are given
and records and reports properly kept and filed by the Corporation as required
by law; (c) shall be the custodian of the seal of the Corporation and see that
it is affixed to all documents to be executed on behalf of the Corporation
under its seal; and (d) in general, shall perform all duties incident to the
office of Secretary, and such other duties as may from time to time be assigned
to the Secretary by the Board of Directors, the Chairman of the Board, or the
President.
SECTION 1.058 THE TREASURER. The Treasurer, or in Treasurer's absence, an
Assistant Treasurer, (a) shall have or provide for the custody of, and when
proper pay out, disburse, or otherwise dispose of, the funds or other property
of the Corporation; (b) shall collect and receive or provide for the collection
and receipt of moneys earned by or in any manner due to or received by the
Corporation; (c) shall deposit all funds in his custody as Treasurer in such
banks or other places of deposit as the Board of Directors may from time to
time designate; (d) shall keep accurate financial records and accounts and,
whenever so required by the Board of Directors, render statements showing his
transactions as Treasurer and the financial condition of the Corporation; and
(e) in general, shall discharge
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such other duties as may from time to time by assigned to the Treasurer by the
Board of Directors, the Chairman of the Board, or the President.
SECTION 1.059 SALARIES. The salaries and other compensation of the
officers and agents of the Corporation elected or appointed by the Board of
Directors shall be fixed from time to time by the Board of Directors. The
salaries and other compensation of subordinate officers appointed pursuant to
delegated authority under Section 5.03 hereof shall be fixed from time to time
by the officers or committee appointing them.
ARTICLE VI.
CERTIFICATES OF STOCK, TRANSFER, ETC.
SECTION 1.061 ISSUANCE. Each stockholder shall be entitled to a
certificate or certificates for shares of stock of the Corporation owned by
such stockholder upon request therefor. The stock certificates of the
Corporation shall be consecutively numbered and shall be registered in the
stock ledger and transfer books of the Corporation as they are issued. They
shall be signed by the Chairman of the Board or by the President or a Vice
President, and by the Secretary or an Assistant Secretary, if any, or by the
Treasurer or an Assistant Treasurer, if any, and shall bear the corporate seal,
which may be a facsimile, engraved, or printed. Any and all of the signatures
upon such certificate may be a facsimile, engraved, or printed. In case any
officer, transfer agent, or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent, or registrar before the certificate is issued, it
may be issued with the same effect as if such person were such officer,
transfer agent, or registrar at the date of its issue.
SECTION 1.062 TRANSFER, LEGENDS, ETC. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation, or authority to
transfer the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
The Board of Directors may by resolution, (a) impose restrictions on transfer
or registration of transfer of shares of stock of the Corporation, and (b)
require as a condition to the issuance or transfer of such shares that the
person or persons to whom such shares are to be issued or transferred agree in
writing to such restrictions. In the event that any such restrictions on
transfer or registration of transfer are so imposed, the Corporation shall
require that such restrictions be conspicuously noted on all certificates
representing such shares. [In addition, all shares of the Corporation's stock
are subject to several restrictions and limitations as set forth in the Rights
Agreement, which are to be noted on all certificates representing such shares.]
SECTION 1.063 LOST, STOLEN, DEFACED, WORN OUT, OR DESTROYED. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen, defaced, worn-out, or destroyed, upon the making of
an affidavit of that fact by the
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person claiming the certificate of stock to be lost, stolen, defaced, worn out,
or destroyed. When authorizing such issuance of a new certificate or
certificates, the Corporation may, as a condition precedent thereto, (a)
require the owner of any defaced or worn out certificate to deliver such
certificate to the Corporation and order the cancellation of the same, and (b)
require the owner of any lost, stolen or destroyed certificate or certificates,
or his legal representative, to advertise the same in such manner as the
Corporation shall require and to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
or destroyed. Thereupon, the Corporation may cause to be issued to such person
a new certificate in replacement for the certificate alleged to have been lost,
stolen, defaced, worn out, or destroyed. Upon the stub of every new certificate
so issued shall be noted the fact of such issue and the number, date, and name
of the registered owner of the lost, stolen, defaced, worn out, or destroyed
certificate in lieu of which the new certificate is issued. Every certificate
issued hereunder shall be issued without payment to the Corporation for such
certificate; provided that, there shall be paid to the Corporation a sum equal
to any exceptional expenses incurred by the Corporation in providing for or
obtaining any such indemnity and security as is referred to herein.
SECTION 1.064 RECORD HOLDER OF SHARES. Except as otherwise provided by
applicable law, the Certificate of Incorporation, or these Bylaws, the
Corporation (a) shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote
as such owner, (b) shall be entitled to hold liable for any required calls and
assessments a person so registered, and (c) shall not be bound to recognize (i)
any entity or person as a transferee of stock unless such entity or person both
complies with all transfer and other restrictions, if any, imposed hereby or by
the Certificate of Incorporation, or (ii) any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof.
Unless otherwise required under applicable law, the Corporation may treat
a fiduciary as having capability and authority to exercise all rights of
ownership in respect of shares of record in the name of a decedent holder, a
person, firm, or corporation in conservation, receivership, or bankruptcy, a
minor, an incompetent person, or a person under disability, as the case may be,
for whom such fiduciary is acting, and the Corporation, its transfer agent, and
its registrar, if any, upon presentation of evidence of appointment of such
fiduciary shall be under no duty to inquire as to the powers of such fiduciary
and shall not be liable for any loss caused by any act done or omitted to be
done by the Corporation or its transfer agent or registrar, if any, in reliance
thereon.
SECTION 1.065 DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to express consent
to corporate action in writing without a meeting, or entitled to receive
payments of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the
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Board of Directors may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than (10) calendar days before the date of such
meeting, nor more than sixty (60) calendar days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting provided
that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 1.066 APPOINTMENT OF TRANSFER AGENTS, REGISTRARS, ETC. The Board
of Directors may from time to time by resolution appoint (a) one (1) or more
transfer agents and registrars for the shares of stock of the Corporation, (b)
a plan agent to administer any employee benefit, dividend reinvestment, or
similar plan of the Corporation, and (c) a dividend disbursing agent to
disburse any and all dividends authorized by the Board and payable with respect
to the shares of stock of the Corporation. The Board of Directors shall also
have authority to make such other rules and regulations not inconsistent with
applicable law, the Certificate of Incorporation, or these Bylaws, as it deems
necessary or advisable with respect to the issuance, transfer, and registration
of certificates for shares and the shares of stock represented thereby.
ARTICLE VII.
GENERAL PROVISIONS
SECTION 1.071 DIVIDENDS. Subject to applicable law, the Certificate of
Incorporation and the Rights Agreement, dividends upon the shares of capital
stock of the Corporation may be declared by the Board of Directors at any
regular or special meeting. Dividends may be paid in cash, in property, or in
shares of the capital stock of the Corporation, or in any combination thereof,
but only out of funds available for the payment of dividends as provided by
applicable law. Any dividends declared upon the stock of the Corporation shall
be payable on such date or dates as the Board of Directors shall determine by
resolution. If the date fixed for the payment of any dividend shall in any year
fall upon a legal holiday, then the dividend payable on such date shall be paid
on the next day not a legal holiday.
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Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its discretion, shall determine by resolution
is proper as a reserve or reserves to meet contingencies, for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors shall so determine is in the
best interests of the Corporation and its stockholders. The Board may modify or
abolish any such reserves in the manner in which it was created.
SECTION 1.072 CONTRACTS, ETC. Except as otherwise provided by applicable
law, the Certificate of Incorporation, or these Bylaws, the Board of Directors
may authorize any officer or officers, any employee or employees, or any agent
or agents, to enter into any contract or to execute, acknowledge, or deliver
any agreement, deed, mortgage, bond, or other instrument in the name of and on
behalf of the Corporation and to affix the Corporation's seal thereon. Such
authority may be general or confined to specific instances.
SECTION 1.073 CHECKS. All checks, notes, obligations, bills of exchange,
acceptances, or other orders in writing shall be signed by such person or
persons as the Board of Directors may from time to time designate by
resolution.
SECTION 1.074 CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization, and the
words "Corporate Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
SECTION 1.075 DEPOSITS. All funds of the Corporation shall be deposited
from time to time to credit of the Corporation in such banks, trust companies,
or other depositories as the Board of Directors may approve or designate, and
all such funds shall be withdrawn only upon checks or other orders signed by
such one or more officers, employees, or agents as the Board of Directors shall
from time to time designate.
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SECTION 1.076 EXAMINATION OF CORPORATE RECORDS. Upon written demand under
oath stating the purpose thereof, every stockholder of record shall have a
right to examine, in person or by attorney or other agent, during ordinary
business hours and for any proper purpose, the Corporation's stock ledger, a
list of its stockholders, and its other books and records and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right of inspection, the demand
under oath shall be accompanied by a power of attorney or other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation as its registered
office in Delaware or at its principal place of business.
Any director shall have the right to examine the Corporation's stock
ledger, a list of its stockholders, and its other books and records during
ordinary business hours for a purpose reasonably related to his or her position
as a director.
SECTION 1.077 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation
shall indemnify to the fullest extent authorized or permitted by law any
current or former director or officer of the Corporation (or his or her
testator or estate) made or threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether criminal, civil
administrative, or investigative, by reason of the fact that he or she is or
was a director or officer of the Corporation or is or was serving, at the
request of the Corporation, as a director, officer, employee, or agent of
another corporation, partnership,
16
<PAGE> 17
joint venture, trust, employee benefit plan, or other enterprise. Subject to
applicable law, the Corporation may indemnify an employee or agent of the
Corporation to the extent that and with respect to such proceedings as, the
Board of Directors may determine by resolution, in its discretion.
SECTION 1.078 AMENDMENT OF BYLAWS. The Board of Directors is expressly
authorized to adopt, amend or repeal the Bylaws of the corporation. Any Bylaws
made by the directors under the powers conferred hereby may be amended or
repealed by the directors or by the stockholders. Notwithstanding the foregoing
and anything contained in the Bylaws to the contrary, the Bylaws shall not be
amended or repealed by the stockholders, and no provision inconsistent
therewith shall be adopted by the stockholders, without the affirmative vote of
the holders of at least two-thirds (2/3) of the voting power of all shares of
the corporation entitled to vote generally in the election of directors voting
together as a single class.
17
<PAGE> 1
EXHIBIT 4.1
COMMON STOCK $.01 PAR VALUE
NUMBER PEGASUS SHARES
SYSTEMS INC.
THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE FOR
NEW YORK, NY AND DENVER, CO CERTAIN DEFINITIONS
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 705906 10 5
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
$.01 PAR VALUE PER SHARE, OF
Pegasus Systems, Inc., a corporation organized under the laws of the State of
Delaware, transferable on the books of the Corporation by the holder hereof, in
person or by a duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned by a
Transfer Agent and registered by a registrar of the Corporation.
Witness the facsimile seal of the Corporation and the facsimile
signatures of the Corporation's duly authorized officers.
Dated:
/s/ RIC L. FLOYD /s/ JOHN F. DAVIS III
SECRETARY CHIEF EXECUTIVE OFFICER AND PRESIDENT
[PEGASUS SYSTEMS, INC. CORPORATE SEAL]
COUNTERSIGNED AND REGISTERED:
AMERICAN SECURITIES TRANSFER & TRUST, INC.
P.O. Box 1596, Denver, Colorado 80201
BY
TRANSFER AGENT AND REGISTRAR AUTHORIZED SIGNATURE
<PAGE> 2
PEGASUS SYSTEMS, INC.
The Corporation will furnish without charge to each stockholder who so requests
a statement of (i) the designations, preferences, limitations and relative
rights, if any, of the shares of each class of stock of the Corporation and
(ii) the variations in the relative rights and preferences of the respective
series of each class of stock issuable in series in so far as they have been
fixed and determined, and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series. Requests
may be directed to the Corporation or transfer agent named on the face of this
certificate.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
----------------------- -----------------------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
------------------------------------------------------
(State)
UNIF TRF MIN ACT -- Custodian (until age )
------------- -------------
(Cust)
under Uniform Transfers
--------------
(Minor)
to Minors Act
-------------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
For Value Received, hereby sell, assign and transfer unto
-----------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
POSTAL ZIP CODE, OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares
- ------------------------------------------------------------------------
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
attorney-in-fact
- ---------------------------------------------------------
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated
----------------------------
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
X
-----------------------------------
(SIGNATURE)
X
-----------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
- --------------------------------------------------------------------------------
SIGNATURE(S) GUARANTEED BY:
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 4.3
RIGHTS AGREEMENT
This Rights Agreement (the "AGREEMENT"), is entered into as of the 25th
day of June, 1996, by and among Pegasus Systems, Inc., a Delaware corporation
(the "COMPANY") and the purchasers of the Company's Series A Preferred Stock
listed on Schedule I attached hereto (the "PURCHASERS") and, for purposes of
certain provisions hereof, the stockholders listed on Schedule II hereto,
including without imitation Lodging Network, Inc., a Delaware corporation
("LNI") (each an "EXISTING STOCKHOLDER" and collectively the "Existing
Stockholders") and the stockholders listed on Schedule III hereto (each a
"Management Holder" and collectively the "MANAGEMENT HOLDERS").
RECITALS
A. The Purchasers and the Company are parties to that certain
Series A Preferred Stock Purchase Agreement dated as of the date hereof (the
"PURCHASE AGREEMENT"),
B. The Existing Stockholders (other than LNI) and the Management
Holders currently hold capital stock of the Company, and the parties desire to
provide certain rights to such holders as provided herein.
C. The Company and LNI have agreed that the Company shall
repurchase from LNI a portion of the shares of capital stock held by LNI in The
Hotel Clearing Corporation, a subsidiary of the Company ("HCC'') and shall issue
shares of Common Stock of the Company to LNI upon conversion by LNI of the
balance of the HCC shares held by LNI, and to grant certain rights to LNI as
set forth herein.
D. The execution of this Agreement is a condition to the closing
of the transactions contemplated by the Purchase Agreement.
E. The Purchasers, the Existing Stockholders, the Management
Holders and the Company desire that the transactions contemplated by the
Purchase Agreement be consummated.
NOW, THEREFORE, in reliance on the foregoing recitals, and in and for
the mutual covenants and consideration set forth herein, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
1.1 The terms "AFFILIATE" and "AFFILIATED" shall refer to
any person who is an "affiliate" as defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended. For
purposes of this definition, "person" shall mean any individual, firm,
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental authority or other entity of
any kind, and shall include any successor (by merger or otherwise of such
entity.
<PAGE> 2
1.2 "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.3 "COMMON STOCK" shall mean the Company's Common Stock,
$0.01 par value per share.
1.4 "CONVERSION STOCK" shall mean the Common Stock issued
or issuable pursuant to conversion of the Series A Preferred.
1.5 "EXISTING STOCKHOLDERS" shall mean the Existing
Stockholders as listed on Schedule II hereof and any person holding Other
Shareholder Stock to whom the rights under this Agreement have been transferred
in accordance with Section 14 hereof.
1.6 "HOLDER" shall mean any Purchaser, Existing
Stockholder or Management Holder holding Registrable Securities and any person
holding Registrable Securities to whom the rights under this Agreement have
been transferred in accordance with Section 14 hereof.
1.7 "INITIATING HOLDERS" shall mean any Holder or Holders
(other than Management Holders and Existing Stockholders) holding, in the
aggregate, at least forty percent (40%) of the then outstanding Registrable
Securities (not including Management Stock or Other Shareholder Stock).
1.8 The term "MAJOR HOLDER" shall mean each Holder (but
not any Management Holder or Existing Stockholder) who is a holder of at least
50,000 shares of Registrable Securities (as adjusted for any stock split, stock
dividend or similar capital reorganization), and permitted assignees under
Section 17(e) hereof.
1.9 "MANAGEMENT HOLDERS" shall mean the Management
Holders as listed on Schedule III hereof and any person holding Management
Stock to whom the rights under this Agreement have been transferred in
accordance with Section 14 hereof.
1.10 "REGISTRABLE SECURITIES" shall mean (a) the
Conversion Stock and any Common Stock of the Company issued or issuable in
respect of the Conversion Stock, or other securities issued or issuable
pursuant to the conversion of the Series A Preferred upon any stock split,
dividend, combination, recapitalization or similar event, or any Common Stock
otherwise issued or issuable with respect to the Series A Preferred; (b) all
shares of Common Stock of the Company currently held by the Existing
Stockholders as well as the 67,300 shares of Common Stock to be issued to LNI
in connection with the repurchase of HCC stock, as set forth on Schedule II
hereto (the "Other Shareholder Stock"), and any Common Stock of the Company
issued or issuable in respect of such Other Shareholder Stock upon any stock
split, dividend, combination, recapitalization or similar event (which
additional shares shall also be referred to as Other Shareholder Stock); and
(c) with respect to any registration subsequent to the Company's initial
Qualified Public Offering (as defined below), up to 25% of the shares of the
Common Stock currently held by the Management Holders, as specified on Schedule
III hereto, and held as of the time of such registration by Management Holders
who shall continue to be employees or consultants to the Company (the
"Management Stock"), and any Common Stock of the Company issued
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<PAGE> 3
or issuable in respect of such Management Stock upon any stock split, dividend,
combination, recapitalization or similar event (which additional shares shall
also be referred to as Management Stock); provided, however, that shares of
Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (i) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (ii) subject to Section 16 below, sold or are available for
sale in the opinion of counsel to the Company in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale.
1.11 The terms "REGISTER," "REGISTEREd" and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement by the Commission.
1.12 "REGISTRATION EXPENSES" shall mean all expenses,
except as otherwise stated below, incurred by the Company in complying with
Sections 5, 6 and 7 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, fees and disbursements for one
counsel for the Holders selected by the Holders and approved by the Company
(which consent will not be unreasonably withheld), blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration, but excluding (a) the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and (b) Selling
Expenses.
1.13 "RESTRICTED SECURITIES" shall mean the securities of
the Company required to bear the legend set forth in Section 3 hereof.
1.14 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended, or any similar federal statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
1.15 "SELLING EXPENSES" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and, except as set forth above, all
reasonable fees and disbursements of counsel for any Holder other than the fees
and disbursements of counsel included in Registration Expenses.
1.16 "SERIES A PREFERRED" shall mean the Company's Series
A Preferred Stock, $0.01 par value per share, issued pursuant to the Purchase
Agreement.
1.17 "UNDERWRITER" shall mean the managing underwriter or
underwriters in a public offering pursuant to Section 5, Section 6 or Section 7
hereof.
2. RESTRICTIONS ON TRANSFERABILITY. The Series A Preferred and
the Conversion Stock shall not be sold, assigned, transferred or pledged except
upon the conditions specified in this Agreement, which conditions are intended
to ensure compliance with the provisions of the Securities Act and
-3-
<PAGE> 4
applicable state and foreign securities laws. Each Purchaser shall cause any
proposed purchaser, assignee, transferee, or pledgee of Series A Preferred or
Conversion Stock held by such Purchaser to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
3. RESTRICTIVE LEGEND. Each certificate representing (a) the
Series A Preferred Stock, (b) the Conversion Stock and (c) any other securities
issued in respect of the Series A Preferred or the Conversion Stock upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event shall (unless otherwise permitted by the provisions of Section 4 below)
be stamped or otherwise imprinted with the following legends (in addition to
any legend required under applicable state or foreign securities laws):
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT. COPIES OF THE AGREEMENTS COVERING THE
PURCHASE OF THESE SHARES, IMPOSING CERTAIN RIGHTS OF
FIRST REFUSAL AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY
OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY."
Each Purchaser consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Series A
Preferred or the Common Stock in order to implement the restrictions on
transfer established pursuant to this Agreement or applicable law.
4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in
all respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (a) a
transfer not involving a change in beneficial ownership or (b) in transactions
involving the distribution without consideration of Restricted Securities by
any of the Purchasers to any of its partners, or retired partners, or to the
estate of any of its partners or retired partners, so long as each such
transferee agrees in writing to be bound by the terms of this Agreement),
unless there is in effect a registration statement under the Securities Act
covering the proposed transfer, the holder thereof shall give written notice to
the Company of such holder's intention to effect such transfer, sale,
assignment or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense by either
(a) an unqualified written opinion of legal counsel addressed to the Company,
to the effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act, or (b) a "no action"
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<PAGE> 5
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, whereupon the holder of
such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the holder
to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144 (or similar successor provision), the appropriate
restrictive legend set forth in Section 3 above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for such
holder and the Company such legend is not required in order to establish
compliance with any provision of the Securities Act or this Agreement.
5. REQUESTED REGISTRATION.
5.1 Notice of Registration; Registration. In case the
Company shall receive from Initiating Holders a written request that the
Company effect any registration, qualification or compliance (other than a
registration on Form S-3 or any successor form) with respect to at least 20% of
the Registrable Securities then held by the Initiating Holders (or any lesser
percentage resulting in an aggregate offering price to the public of at least
$10,000,000 at a price of at least $13.00 per share (as adjusted for stock
splits, dividends, subdivision, combinations, reclassifications and like
events)), the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use all reasonable
efforts to effect such registration, qualification or compliance (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request given within twenty (20) days after
receipt of such written notice from the Company, provided, however, that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 5:
(1) In any particular jurisdiction in
which the Company would be required to qualify to do business or execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act;
(2) Prior to the earlier of (a) three
(3) years following the date of this Agreement, or (b) six months after the
effective date of the registration statement pertaining to the first
underwritten firm commitment public offering of securities of the Company for
its own account (other than a registration relating solely to a Commission Rule
145 transaction or a registration relating solely to employee benefit plans);
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<PAGE> 6
(3) After the Company has effected
two (2) registrations pursuant to this Section 5 and such registrations have
been declared or ordered effective and all or a portion of the securities
offered pursuant to such registrations have been sold; or
(4) If at the time of the request
to register Registrable Securities the Company gives notice within thirty (30)
days of such request that it is engaged or has bona fide plans to engage within
thirty (30) days of the time of the request in a firmly underwritten registered
public offering in which the Holders may include Registrable Securities
pursuant to Section 5, 6 or 7 hereof.
Subject to the foregoing clauses (l) through (4) and to Section 5.3,
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt
of the request of the Initiating Holders.
5.2 Underwriting
(a) If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 5 and the Company shall include such information in the
written notice referred to in Section 5.1. The right of any Holder to
registration pursuant to Section 5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent requested (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) as provided herein.
(b) The Company shall (together with all Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the Underwriter selected for
such underwriting by a majority in interest of the Initiating Holders. If any
Holder disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company, the Underwriter and the
Initiating Holders. The Registrable Securities and/or other securities so
withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed
by the underwriters), then the Company shall offer to all Holders who have
included Registrable Securities in the registration the right to include
additional Registrable Securities in proportion (as nearly as practicable) to
the total amount of Registrable Securities held by each such Holder.
(c) Notwithstanding any other provision of this
Section 5, if the Underwriter determines that marketing factors require a
limitation on the number of shares to be underwritten, the Underwriter may
limit the number of Registrable Securities to be included in the registration
and underwriting; provided, however, that the number of shares of Registrable
Securities offered by the Holders that may be included in the registration and
underwriting shall be allocated among the Holders in proportion, as nearly as
practicable, to the respective aggregate amounts of Registrable Securities held
by such Holders at the time of filing the registration statement. If the
Underwriter has not so limited the
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<PAGE> 7
number of Registrable Securities to be underwritten, the Company may include
securities for its own account or the account of others in such registration if
the Underwriter so agrees and if the number of Registrable Securities which
would otherwise have been included in such registration and underwriting will
not thereby be limited or the price applicable to such included Registrable
Securities will not thereby be reduced.
5.3 Delay of Registration. If the Company shall furnish
to the Initiating Holders a certificate signed by the President of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be not in the best interests of the Company and its
stockholders for such registration statement (including any supplement or
amendment thereto) to be filed on or before the date filing would be required
and it is therefore appropriate to defer such filing, then the Company may
direct that such request for registration be delayed for a period not in excess
of sixty (60) days, such right to delay a request to be exercised by the
Company no more than twice in any twelve month period.
6. COMPANY REGISTRATION.
6.1 Notice of Registration. If at any time or from time
to time the Company shall determine to register any of its equity securities,
either for its own account or the account of a security holder or holders,
other than (a) a registration relating solely to employee benefit plans, or (b)
a registration relating solely to a Rule 145 transaction, the Company shall:
(i) promptly give to each Holder written notice thereof, and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of such
written notice from the Company, by any Holder.
6.2 Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 6.l(i). In such event the right of any
Holder to registration pursuant to this Section 6 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in
customary form with the Underwriter, selected for such Underwriting by the
Company. Notwithstanding any other provision of this Section 6, if the
Underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the underwriter may limit, on a pro rata
basis, the Registrable Securities to be included in such registration;
provided, however, that in no public offering shall other holders of
"piggyback" registration rights participate in such offering unless the Holders
have participated to the full extent requested. The Company shall so advise
all Holders distributing their securities through such underwriting and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
-7-
<PAGE> 8
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Holder
to the nearest one hundred (100) shares. If any Holder disapproves of the terms
of any such underwriting, he may elect to withdraw therefrom by written notice
to the Company and the managing underwriter.
6.3 Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 6 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
7. REGISTRATION ON FORM S-3.
(a) If Initiating Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form 5-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall (i) promptly give written notice of the
proposed registration to all other Holders, and (ii) as soon as practicable,
use all reasonable efforts to effect such registration, qualification or
compliance (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request, together with all
or such portion of the Registrable Securities of any Holder or Holders joining
in such request as are specified in a written request given within twenty (20)
days after receipt of such written notice from the Company, use all reasonable
efforts to cause such Registrable Securities to be registered for the offering
on such form and to cause such Registrable Securities to be qualified in such
jurisdictions as the Initiating Holders may reasonably request; provided,
however, that the Company shall not be obligated to effect more than four (4)
registrations under this Section 7. The substantive provisions of Section 6.2,
excluding all provisions relating to the rights of the Underwriter to exclude
certain percentages of Registrable Securities for a subject offering, shall be
applicable to each registration initiated under this Section 7.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 7: (i) more than once
in any twelve (12) month period; (ii) in any particular jurisdiction in which
the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act; (iii) if the Company, within ten (10) days of
the receipt of the request of Initiating Holders pursuant to this Section 7,
gives notice of its bona fide intention to effect the filing of a registration
statement with the Commission within sixty (60) days of receipt of such request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which is
not appropriate for the registration of Registrable Securities) in which such
Holders can exercise their rights pursuant to Section 6 hereof; or (iv) during
the period starting with the date sixty (60) days prior to the Company's
estimated date of filing of, and ending on the date three (3) months
immediately following, the effective date of any registration statement
pertaining to securities of the Company (other
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<PAGE> 9
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective.
(c) Registrations effected pursuant to this Section 7
shall not be counted as demands for registration or registrations effected
pursuant to Section 5 or Section 6, respectively.
8. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the consent of (i)
Holders of in excess of 50% of the Registrable Securities then outstanding, and
(ii) Holders of in excess of 50% of the Registrable Securities held by Holders
other than Existing Holders and Management Holders, enter into any agreement
granting any holder or prospective holder of any securities of the Company
registration rights, including standoff rights, superior to the registration
rights granted Holders hereunder.
9. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with all registrations pursuant to Section 5, Section 6 and
Section 7 shall be borne by the Company. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the Holders of such securities pro rata on the basis of the number of
shares so registered. In connection with any registration pursuant to Sections
5 and 6, if the participating Holders elect to be represented by counsel for
the Company, the Company shall pay reasonable fees and disbursements of one
counsel incurred in so representing such participating Holders.
10. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company shall keep each Holder or its counsel advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof At its expense the Company shall:
(a) Prepare and file with the Commission a registration
statement, and all requisite supplements and amendments thereto, with respect
to such securities and use its best efforts to cause such registration
statement, as amended, to become and remain effective for at least one hundred
twenty (120) days;
(b) Furnish to the Holders or their counsel participating
in such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, and all
supplements and amendments thereto, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order
to facilitate the public offering of such securities and such other information
necessary to allow the Holders participating in such registration to remain
reasonably informed about the public offering;
(c) With respect to registrations effected pursuant to
Section 6 and Section 7 above, use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided, however, that the Company shall not be required in
connection therewith or as a condition
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<PAGE> 10
thereto to qualify to do business or to file a general consent to service for
process in any such states or jurisdictions;
(d) With respect to registrations effected pursuant to
Section 7 above, in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the Underwriter of such offering;
(e) Notify each Holder of Registrable Securities or its
counsel covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(f) At the request of any Holder requesting registration
of Registrable Securities pursuant to Section 5, Section 6 or Section 7 above,
furnish to the Holders participating in such registration and to the
underwriters, if any, of such offering, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration statement pursuant to SectionS, Section 6 or Section 7 above, if
such securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion,
dated such date, of counsel representing the Company for the purposes of
registration addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a letter, dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
11. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, or the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), against all
expenses, claims, losses, damages or liabilities (joint or several) (or actions
in respect thereof), to which they become subject under the Securities Act or
the Exchange Act, including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading, or any violation by the Company of the Securities
Act or the Exchange Act or any rule or regulation promulgated thereunder
applicable to the Company in connection with any such registration,
qualification or
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<PAGE> 11
compliance, and the Company will pay to each such Holder, each of its officers
and directors, and each person controlling such Holder, each such underwriter
and each person who controls any such underwriter, any legal and any other
expenses reasonably incurred as such expenses are incurred in connection with
investigating, preparing or defending any such claim, loss, damage; liability
or action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder
controlling person or underwriter and stated to be specifically for use
therein; provided, however, that the indemnity agreement contained in this
Section 11(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act or the Exchange Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act or the Exchange Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) to
which any of the foregoing persons may become subject under the Securities Act
or the Exchange Act, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred as such expenses are incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the indemnity agreement
contained in this Section 11(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the liability of each
Holder under this Section 11(b) shall be limited to an amount equal to the
aggregate proceeds received by such Holder from the sale of Registrable
Securities hereunder, unless such liability arises out of or is based on
willful conduct by such Holder.
(c) Each party entitled to indemnification under this
Section 11 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of
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<PAGE> 12
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under this Agreement
unless the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided further, that
the Indemnifying Party shall not assume the defense for matters as to which
there is a conflict of interest or separate and different defenses. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
12. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company or its
counsel such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or Holders
as the Company or its counsel may reasonably request in writing and as shall
be required in connection with any registration, qualification or compliance
referred to in this Agreement.
13. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market legally exists for the Common
Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
(c) Take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such registration under Section 12 to be taken as soon
as practicable after the six-month period following the date on which the first
registration statement filed by the Company for the offering of its equity
securities to the general public is declared effective; and
(d) So long as a Purchaser owns any Restricted Securities
to furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its equity
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company and other information in the
possession of or reasonably
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<PAGE> 13
obtainable by the Company as a Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Purchaser to sell
any such securities without registration.
14. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Holders under Sections 5, 6 and 7 may be
assigned or transferred to any third party who acquires at least 50,000 shares
of Registrable Securities (as may be appropriately adjusted upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar
event), provided that (a) such transfer may otherwise be effected in accordance
with applicable securities laws, and (b) such assignee or transferee agrees to
be bound by the terms of this Agreement and assumes all of the obligations of
the transferring Holder hereunder. Notwithstanding the foregoing, however, the
rights to cause the Company to register securities may be assigned to partners
and constituent members, former partners and former constituent members and
Affiliates of that Holder without regard to the foregoing share threshold or
other requirements, provided that written notice thereof is promptly given to
the Company.
15. STANDOFF AGREEMENT. Each Holder and each of the Existing
Stockholders agree, in connection with the first registration of the Company's
securities which covers Common Stock (or other securities) to be sold on its
behalf to the general public in an underwritten initial public offering, upon
request of the Company or the Underwriter of such initial public offering, not
to sell, make any short sale of; loan, grant any option for the purchase of, or
otherwise dispose of any of the Company's equity securities (other than those
included in the registration) without the prior written consent of the Company
or such Underwriter, as the case may be, for a period of time not to exceed one
hundred eighty (180) days from the effective date of such registration;
provided, however, that all officers, directors and holders of registration
rights (including registration rights granted other than pursuant to this
Agreement) enter into similar agreements and the Company uses all reasonable
efforts to cause all of the holders of one percent (1%) or more of the
outstanding voting securities of the Company to enter into similar agreements.
16. TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to Sections 1 through 15 of this Agreement shall terminate as to any
Holder at such time as Holder holds less than 1% of the Company's outstanding
capital stock and may sell all of such Holder's shares under Rule 144 (or any
successor provisions) promulgated under the Securities Act, or a successor
rule, within a three-month period.
17. RIGHT OF FIRST REFUSAL FOR ISSUANCE OF NEW SECURITIES. The
Company hereby grants to each Major Holder and permitted assignee under Section
17(e) the right of first refusal to purchase a Pro Rata Share (as defined
below) of any New Securities (as defined in subsection 17(a)) which the Company
may, from time to time, propose to sell and issue. A "PRO RATA SHARE," for
purposes of this right of first refusal, shall be a fraction, the numerator of
which is the sum of the number of shares of Common Stock then held by such
Major Holder or issuable to such Major Holder upon conversion of the Series A
Preferred held by such Major Holder, and the denominator of which is the sum of
the total number of shares of Common Stock then outstanding and the number of
shares of Common Stock issuable upon conversion or exercise of all outstanding
capital stock options or warrants convertible into or exercisable for Common
Stock.
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<PAGE> 14
(a) Except as set forth below, "NEW SECURITIES" shall
mean any shares of capital stock of the Company, including Common Stock and
Preferred Stock whether now authorized or not. Notwithstanding the foregoing,
"NEW SECURITIES" does not include (i) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of all or
substantially all of the assets or other transaction whereby the Company or its
stockholders own not less than fifty-one percent (51%) of the voting power of
the surviving or successor corporation, (ii) shares of the Company's Common
Stock or Options exercisable for the purchase of Common Stock issued from and
after the date hereof to employees, officers and directors of, and consultants
to, the Company, pursuant to any incentive program or written agreement
approved by the Board of Directors of the Company (net of any repurchases of
such shares or any other shares of Common Stock originally issued to officers,
directors, employees or consultants to the Corporation, and net of cancellation
or expiration of options), (iii) securities issued in connection with lease or
debt financing transactions, (iv) Common Stock issuable upon conversion of the
Series A Preferred, and (v) securities issued solely pursuant to a stock split
or stock dividend.
(b) In the event that the Company proposes to undertake
an issuance of New Securities, it shall give each Major Holder written notice
of its intention, describing the type of New Securities, and the price and
terms upon which the Company proposes to issue the same. Each such Major Holder
shall have twenty (20) days from the date of receipt of any such notice to
agree to purchase all but not a portion of its respective Pro Rata Share of
such New Securities for the price and upon terms specified in the notice by
giving written notice to the Company.
(c) In the event that such Major Holder fails to exercise
the right of first refusal within said twenty (20) day period, the Company
shall have sixty (60) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within thirty (30) days from the date of said agreement) to sell the
New Securities not elected to be purchased by such Major Holder at the price
and upon terms no more favorable to the purchasers of such securities than
specified in the Company's notice. In the event that the Company has not sold
the New Securities or entered into an agreement to sell the New Securities
within said sixty (60) day period (or sold and issued New Securities in
accordance with the foregoing within thirty (30) days from the date of said
agreement), the Company shall not thereafter issue or sell any New Securities
without first offering such securities in the manner provided above.
(d) The right of first refusal granted under this
Agreement shall terminate immediately prior to the closing of an initial public
offering of the Common Stock of the Company to the general public which is
effected pursuant to a registration statement filed with, and declared
effective by, the Commission under the Securities Act.
(e) The right of first refusal granted Major Holders
under this Section may be in whole or in part assigned or transferred to any
third party who acquires at least 50,000 shares of Registrable Securities (as
may be appropriately adjusted upon a stock split, stock dividend,
recapitalization, merger, consolidation or similar event), provided that, (a)
such transfer may otherwise be effected in accordance with applicable
securities laws, and (b) such assignee or transferee agrees to be bound by this
Agreement and assumes the obligations of the transferring Major Holder
hereunder.
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<PAGE> 15
Notwithstanding the foregoing, however, the right of first refusal may be
assigned by a Major Holder that is a partnership to any of its partners, that
is a venture capital group or fund to an Affiliated entity or person, or that
is a corporation to any of its shareholders without regard to the foregoing
share threshold or other requirement, provided that (a) written notice thereof
is promptly given to the Company, (b) such transfer may otherwise be effected
in accordance with applicable securities laws, and (c) such assignee or
transferee agrees to be bound by this Agreement and assumes the obligations of
the transferring Major Holder hereunder.
18. AFFIRMATIVE COVENANTS. The Company and each Purchaser hereby covenants
and agrees as follows:
18.1 Financial Information.
(a) The Company shall mail the following reports
to each Major Holder:
(i) As soon as practicable after the end
of each fiscal year, and in any event within 90 days thereafter, a copy of the
annual audit report (prepared in accordance with generally accepted accounting
principles) for such year for the Company and any consolidated subsidiary,
including therein Consolidated balance sheets of the Company and any such
subsidiary as of the end of such fiscal year, Consolidated statements of income
and stockholders equity and statements of cash flow of the Company and any such
subsidiary for such fiscal year, setting forth in each case in comparative form
the corresponding figures for the preceding fiscal year, all duly certified by
an independent public accounting firm selected by the Company's Board of
Directors;
(ii) As soon as practicable after the end
of the first, second, third and fourth quarterly accounting periods in each
fiscal year of the Company, and in any event within 45 days thereafter, a
Consolidated budget model balance sheet of the Company as of the end of each
such quarterly period, and Consolidated budget model statements of income and
stockholders equity and Consolidated budget model statements of cash flows of
the Company and any subsidiary for such period and for the current fiscal year
to date, prepared in accordance with generally accepted accounting principles
(other than for accompanying notes), subject to changes resulting from year-end
audit adjustments, and signed by the principal financial or accounting officer
of the Company;
(iii) As soon as practicable after the end of
each month, and in any event within 30 days thereafter, Consolidated budget
model balance sheets of the Company and any subsidiary as of the end of such
month, and Consolidated budget model statements of income and stockholders'
equity for each month and for the current fiscal year to date, and comparing
such results to the then current business plan, prepared in accordance with
generally accepted accounting principles (other than for accompanying notes),
subject to changes resulting from year-end audit adjustments and signed by the
principal financial or accounting officer of the Company;
(iv) As soon as available (but in any
event at least within 30 days before the commencement of its fiscal year), an
annual budget and business plan prepared on a monthly basis for each fiscal
year, together with any modifications thereto adopted through such fiscal year;
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<PAGE> 16
(v) With respect to the financial
statements called for in subsections (ii) and (iii) of this Section 18.1 (a),
an instrument executed by the Chief Financial Officer or President of the
Company and certifying that such financial statements were prepared in
accordance with generally accepted accounting principles consistently applied
with prior practice for earlier periods (with the exception of footnotes that
may be required by generally accepted accounting principles) and fairly present
the financial condition of the Company and its results of operation for the
period specified, subject to period-end adjustment; and
(vi) Such other information relating to
the financial condition, business, prospects or corporate affairs of the
Company as the Major Holder may from time to time reasonably request.
(b) The Company shall also afford each Major
Holder, at the principal offices of the Company, reasonable access to material
documents of the Company and rights to examine without undue disruption the
facilities and offices of the Company, upon at least five (5) days notice in
advance of such visit to the Company from such Major Holder and upon receipt of
a request from such Major Holder specifying which documents, offices and
facilities such Major Holder wishes to inspect five (5) days in advance of such
visit; but, in any event, not more than once every fiscal quarter.
(c) The Company shall afford each Major Holder,
reasonable Board of Directors' visitation rights. Such visitation rights shall
include the right to designate one representative of the Major Holders
(selected by the affirmative vote of a majority of the Major Holders) to (i)
receive reasonable notice in advance of all Board of Directors' meetings, (ii)
the right to receive, concurrently with receipt by members of the Board of
Directors, all materials, reports and other written communications received by
members of the Board of Directors and (iii) the right to attend all Board of
Directors meetings.
(d) The covenants set forth in this Section 18.1
shall terminate and be of no further force or effect at such time as the
Company is required to file reports pursuant to Section 13 or 15(d) of the
Exchange Act.
(e) Notwithstanding any other provisions of this
Section 18.1 or Section 13(d), the Company may require as a condition precedent
to any Major Holder's rights under this Section 18.1 or Section 13(d), that
each person proposing to attend any meeting of the Board of Directors and each
person to have access to any of the information provided by the Company to its
Board of Directors shall agree to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so received during such
meetings or otherwise; and, provided further, that the Company reserves the
right not to provide such information to a Major Holder or its representative
(or not to provide to a Major Holder such portions of the information which is
sensitive vis & vis such Major Holder) and to exclude such Major Holder or its
representative from any meeting or portion thereof to the extent necessary in
order to prevent the breach of attorney client privilege or if such Major
Holder or its representative is a competitor of the Company (including any of
its direct or indirect subsidiaries).
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<PAGE> 17
18.2 Confidential Information. Each Major Holder agrees
that any information obtained by such Major Holder pursuant to Section 18.1 or
Section 13(d) which is, or would reasonably be perceived to be, proprietary to
the Company or otherwise confidential will not be disclosed without the prior
written consent of the Company. Notwithstanding the foregoing, each Major
Holder may disclose such information, on a need to know basis, to its
employees, accountants or attorneys, or to the employees, accountants or
attorneys of its general partner or investment manager (so long as each such
person to whom confidential information is disclosed agrees to keep such
information confidential), in compliance with a court order or when otherwise
necessary to enforce any of the Major Holder's rights hereunder. Such
information may also be disclosed to a Major Holder's constituent partners,
members or shareholders (so long as each such person to whom confidential
information is disclosed agrees to keep such information confidential). Each
Major Holder further acknowledges and understands that any information will not
be utilized by such Major Holder in connection with purchases and/or sales of
the Company's securities except in compliance with applicable state and federal
antifraud statutes.
18.3 Assignment of Rights to Financial Information. The
rights and obligations pursuant to Sections 18.1 and 18.2 may be assigned or
otherwise conveyed by any Major Holder, or by any subsequent transferee of any
such rights to a transferee, upon prior written notice to the Company, upon the
transfer by such Major Holder of at least 50,000 shares of Registrable
Securities to any transferee other than a competitor or customer of the Company
(including any of its direct or indirect subsidiaries); provided, however, that
the Company shall not be obligated under Section 18.1 to provide to any
transferee other than a person or entity affiliated with the transferor any
information which the Company deems in good faith to be a trade secret or
similar confidential information.
19. VOTING AGREEMENT.
(a) For so long as the Purchasers or their Affiliates
hold not less than an aggregate of 180,000 shares of Series A Preferred or
Common Stock issued on conversion thereof (as appropriately adjusted for all
stock splits, dividends, combinations, reclassifications and the like), each of
the Existing Stockholders, Management Holders and Purchasers (and their
Affiliates) agrees to vote all of the shares of Common Stock Series A Preferred
or other securities of the Company entitled to vote in the election of
directors, to elect two (2) persons designated by the Purchasers to serve as
members of the Company's Board of Directors; provided, however, that if the
size of the Board of Directors shall be increased or decreased, each of the
Existing Stockholders, Management Holders and Purchasers (and their Affiliates)
agrees to vote all of the shares of Common Stock Series A Preferred or other
securities of the Company entitled to vote in an election of directors, to
elect a number of persons designated by the Purchasers to serve as members of
the Company's Board of Directors such that the number of persons designated by
the Purchasers shall constitute at least 20% of the Board of Directors. The
Purchasers have designated Donald Dixon and Rockwell Schnabel to serve as
directors effective as of the date hereof The Company shall reimburse the
reasonable expenses of Board meeting attendance by the representatives of the
Purchasers.
(b) In the event that any person designated to the Board
of Directors in accordance with Section 19(a) above resigns or otherwise ceases
to be a director, a replacement director shall be
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<PAGE> 18
designated by the Purchasers and the terms of this Section 19 shall apply to
any such replacement director for so long as it would otherwise apply to the
initial director.
(c) Each of the Purchasers, Management Holders and
Existing Stockholders agrees to be present, in person or by proxy, at all
meetings of shareholders of the Company so that all shares of voting securities
held by such Purchaser, Management Holder or Existing Stockholder may be voted
for the election of the directors as set forth in this Section 19.
(d) So long as the provisions of this Section 19 are in
effect, each certificate evidencing shares of voting securities held by the
Purchasers, Management Holders and the Existing Stockholders shall bear a
legend in substantially the following form:
"THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON VOTING AS SET
FORTH IN A RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL
HOLDER OF SUCH SHARES. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS AND ITS REGISTERED OFFICE."
(e) The provisions of this Section 19 shall terminate
upon the closing of the Company's initial public offering of Common Stock
pursuant to a registration statement declared effective by the Commission.
20. COMPANY RIGHT OF FIRST REFUSAL ON CERTAIN SALES OF SERIES A
PREFERRED STOCK AND CONVERSION STOCK
20.1 General. In the event that a Holder proposes to make
any sale or transfer of Series A Preferred and Conversion Stock (or proposed
sale or transfer) otherwise permitted pursuant to this Agreement, to any
proposed transferee which is not solely a financial investor and which proposes
to acquire the shares for strategic business purposes and not solely as an
investment, then prior to effecting such sale or transfer the Holder shall give
the Company the opportunity to purchase such shares in the following manner:
(i) Such Holder shall give notice (the "TRANSFER
NOTICE") to the Company in writing of such intention, specifying the securities
proposed to be sold or transferred, the proposed price per share therefor (the
"TRANSFER PRICE"), the name of the proposed transferee or transferees and the
other material terms upon which such disposition is proposed to be made,
including such other terms and information as the Company may reasonably
request in order to confirm the bona fide nature of the proposed transaction.
(ii) The Company shall have the right, exercisable
by written notice given by the Company to such Holder within ten (10) days
after receipt of such Transfer Notice to purchase all (but not less than all)
of the securities specified in such Transfer Notice. The Company may during
such ten (10) day period advise such Holder of the Company's desire to exercise
its right of first refusal set forth herein subject to the ability of the
Company to secure financing. In such event, the Company shall
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<PAGE> 19
have an additional thirty (30) days following the initial ten (10) day period
in which to secure financing. At the end of the thirty (30) period, the Company
shall advise such Holder as to whether the Company has successfully secured the
financing. If not, the Company's exercise of its right of first refusal shall
be deemed void and such Holder shall be entitled to consummate the proposed
transaction with the third party or parties.
(iii) If the Company exercises its right of first
refusal hereunder, the closing of the purchase of the securities with respect
to which such right has been exercised shall take place within thirty (30) days
after the Company gives notice of such exercise, which period of time shall be
extended if necessary to comply with applicable securities laws and
regulations. Upon exercise of its right of first refusal, the Company and such
Holder shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.
(iv) If the Company does not exercise its right of
first refusal hereunder within the ten (10) day period specified for such
exercise (or, in the event that the right has been exercised subject to
securing financing, within the additional thirty (30) day period specified
above), such Holder shall be free, during the period of ninety (90) days
following the expiration of such time for exercise to enter into an agreement
to sell the securities specified in such Transfer Notice, to the specified
proposed transferee or another investor which is solely a financial investor
acquiring for investment purposes, on terms no less favorable to such Holder
than the terms specified in such Transfer Notice, provided that the closing of
the purchase and sale of such securities shall take place within sixty (60)
days after such Holder enters into such agreement.
20.2 No Assignment of Rights of First Refusal The Company
may not assign its rights of first refusal under this Section 20.
20.2 Termination The Company's right of first refusal set
forth herein shall terminate upon the first to occur of (i) the closing of an
initial public offering of the Common Stock of the Company to the general
public which is effected pursuant to a registration statement filed with, and
declared effective by, the Commission under the Securities Act, and (ii) such
date as the Company shall be subject to the reporting requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
21. MISCELLANEOUS.
21.1 Aggregation of Shares. For purposes of any provision
of this Agreement requiring a person or entity to hold a minimum number of
shares of Series A Preferred or Registrable Securities in order to gain the
benefit of such provision, all shares beneficially owned by Affiliated entities
or persons (including partners and constituent members and former partners and
former constituent members) shall be aggregated together for the purposes of
determining such Holder's status or rights under such provision. For purposes
of this Section 21.1 the Company may rely on such person whom a group of
related persons shall designate from time to time (which person shall initially
be the Chief
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<PAGE> 20
Financial Officer of Trident Capital, L.P., for Information Associates, L.P.
and Information Associates, C.V. and related persons) for information relating
to the affiliations of entities or persons.
21.2 Governing Law. This Agreement in all respects shall
be governed by and construed and enforced in accordance with the corporate laws
of the State of Delaware and (with respect to matters other than matters of
corporate law) the laws of the State of Texas as such laws apply to contracts
entered into and wholly to be performed within such state. In any litigation
relating to this Agreement or the transactions contemplated hereby, the
prevailing party shall be entitled to recover its costs and reasonable
attorneys' fees.
21.3 Survival. The representations, warranties, covenants
and agreements made herein shall survive any investigation made by any
Purchaser and the closing of the transactions contemplated hereby.
21.4 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
21.5 Entire Agreement; Amendment. This Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof; and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought; provided, however, that any provision of this Agreement may be amended,
waived or modified with the written consent of (i) the Company, (ii) Holders of
at least 50% of the outstanding shares of Registrable Securities, and (iii)
Holders other than Existing Stockholders and Management Holders who hold at
least a majority of the outstanding shares of Registrable Securities held by
all holders other than Existing Stockholders and Management Holders.
21.6 Effect of Amendment or Waiver, Each Purchaser
acknowledges that by the operation of Section 21.5 hereof the Holders of more
than 50% of the outstanding shares of Registrable Securities shall have the
right and power to diminish or eliminate all rights of such Holders under this
Agreement.
21.7 Notices. All notices and other communications
required or permitted hereunder shall be in writing, shall be effective when
given, and shall in any event be deemed to be given upon receipt or, if
earlier, (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid,
(b) upon delivery, if delivered by hand, (c) one business day after the
business day of deposit with Federal Express or similar overnight courier,
freight
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<PAGE> 21
prepaid or (d) one business day after the business day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed (i) if to a Purchaser, at such
Purchaser's address as set forth in the Purchase Agreement, (ii) if to an
Existing Stockholder, at such Existing Stockholder's address according to the
Company's stock records, and (iii) if to the Company, at the address of its
principal corporate offices (attention: Secretary), or at such other address as
a party may designate by ten days' advance written notice to the other party
pursuant to the provisions above.
21.8 Delays or Omissions. Except as expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing to
any Holder of any Registrable Securities, upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of
such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Holder of any breach or default under this Agreement, or any
waiver on the part of any Holder of any provisions or conditions of this
agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any Holder, shall be cumulative
and not alternative.
21.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
Purchasers, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
21.10 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.
21.11 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not considered in
construing or interpreting this Agreement.
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<PAGE> 22
EXHIBIT 4.3
[Signature Page to Rights Agreement]
The foregoing agreement is hereby executed as of the date
first above written.
"COMPANY"
PEGASUS Systems, INC.
a Delaware corporation
By: /s/ JOHN F. DAVIS III
--------------------------------
Title: PRESIDENT
-----------------------------
"PURCHASERS"
INFORMATION ASSOCIATES, L.P.
By: Trident Capital Management,L.L.C.
Its: General Partner
By: /s/ ROCKWELL SCHNABEL
--------------------------------
INFORMATION ASSOCIATES, C.V
By: Trident Capital Management, L.L.C.
Its: Investment General Partner
By: /s/ ROCKWELL SCHNABEL
--------------------------------
"EXISTING STOCKHOLDERS"
PEGASUS SYSTEMS, INC.
By: /s/ JOHN F. DAVIS III
--------------------------------
Its: President
-------------------------------
CHOICE HOTELS
By: /s/ JAMES R. YOAKUM
--------------------------------
Its: SA. Vice President
-------------------------------
-22-
<PAGE> 23
[Signature Page to Rights Agreement]
ANASAZI, INC.
By: /s/ TOM CASTLEBERRY
--------------------------------
Its: CEO
-------------------------------
BEST WESTERN INTERNATIONAL
By: /s/ WILLIAM WATSON
--------------------------------
Its: Board Representative for BWI
-------------------------------
REED TRAVEL GROUP,
A Division of Reed Elsevier Inc.
By: /s/ MAC HIGHET
--------------------------------
Its: EVP Finance & Operations
-------------------------------
HYATT HOTELS CORPORATION
By: /s/ JOHN BIGGS 6-25-96
--------------------------------
Its: Executive-Vice President
-------------------------------
INTER-CONTINENTAL HOTELS CORPORATION
By: /s/ PAUL J. TRAVERS
--------------------------------
Its: Senior Vice President-Property
Management
-------------------------------
FORTE HOTELS
By: /s/ GAVIN W. CHITTICK
--------------------------------
Its: EXECUTIVE DIRECTOR HOTELS
-------------------------------
June 25th 1996
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<PAGE> 24
[Signature Page to Rights Agreement]
ITT SHERATON CORPORATION
By: /s/ RICHARD L. NAUMANN
--------------------------------
Its: S.V.P. - CIO
-------------------------------
LA QUINTA INNS, INC.
By: /s/ W.C. HAMMETT, JR.
--------------------------------
Its: Sr. Vice President - Acct &
Admin
-------------------------------
MARRIOTT INTERNATIONAL, INC.
By: /s/ BRUCE WOLFF
--------------------------------
Its: Vice President, Distribution
Sales
-------------------------------
PROMUS HOTELS, INC.
By: /s/ DONALD M. KOLODZ 6/25/96
--------------------------------
Its:
-------------------------------
UTELL INTERNATIONAL LTD.
By: /s/ HENRY HORBACZEWSKI
--------------------------------
Its: Authorized Representative
-------------------------------
CHOICE HOTELS INTERNATIONAL
By: /s/ JAMES R. YOAKUM
--------------------------------
Its:
-------------------------------
HFS, INC.
By: /s/ MICHAEL KISTNER
--------------------------------
Its: VP MIS
-------------------------------
TRUSTHOUSE FORTE CALIFORNIA, INC.
By: /s/ ALEX SMITH
--------------------------------
Its:
-------------------------------
HILTON HOTELS CORPORATION
By: /s/ BRUCE ROSENBERG
--------------------------------
Its: V.P. Marketing Distribution
-------------------------------
-24-
<PAGE> 25
[SIGNATURE PAGE TO RIGHTS AGREEMENT]
LODGING NETWORK, INC. WESTIN HOTELS & RESORTS
By: /s/ SCOTT A. SHEFIELD By: /s/ TIMOTHY M. COLEMAN
------------------------------- -------------------------------
Its: Vice-President Timothy M. Coleman
-------------------------------
Its: Vice President-Distribution
--------------------------------
/s/ JOHN F. DAVIS, III
-------------------------------
John F. Davis, III
"MANAGEMENT HOLDERS"
/s/ JOHN F. DAVIS, III
-------------------------------
John F. Davis, III
/s/ BILL NICHOLSON
-------------------------------
Bill Nicholson
/s/ NICK JENT
-------------------------------
Nick Jent
/s/ LARRY WEARDEN
-------------------------------
Larry Wearden
/s/ PHIL HART
-------------------------------
Phil Hart
/s/ BRYAN DONOWHO
-------------------------------
Bryan Donowho
/s/ STEVE REYNOLDS
-------------------------------
Steve Reynolds
-25-
<PAGE> 26
[SIGNATURE PAGE TO RIGHTS AGREEMENT]
/s/ RIC FLOYD
-------------------------------
Ric Floyd
/s/ DENNIS CARPENTER
-------------------------------
Dennis Carpenter
/s/ NANCY CONKLIN
-------------------------------
Nancy Conklin
/s/ CAROLYN LANE
-------------------------------
Carolyn Lane
-26-
<PAGE> 27
SCHEDULE I
Purchasers:
Information Associates, L.P.
Information Associates, C.V.
<PAGE> 28
SCHEDULE II
Existing Stockholders:
Anasazi Service Corporation
Best Western International
Choice Hotels International
Trusthouse Forte California, Inc.
Hilton Hotels Corporation
Hospitality Franchise Systems, Inc.
Reed Travel Group
Hyatt Hotels Corporation
Inter-Continental Hotels Corporation
ITT Sheraton Corporation
La Quinta Corporation Inns, Inc.
Marriott International, Inc.
Promus Hotels, Inc.
Utell International, Ltd.
Westin Hotels and Resorts
John F. Davis, III
<PAGE> 29
SCHEDULE III
Management Holders:
John F. Davis, III
Joseph W. Nicholson
Nick Jent
Larry Wearden
Phil Hart
Bryan Donowho
Steve Reynolds
Ric L. Floyd
Dennis Carpenter
Nancy Conklin
Carolyn Lane
<PAGE> 1
EXHIBIT G
No.1 PEGASUS SYSTEMS, INC.
For the purchase of
259,292 Shares
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that HOLIDAY HOSPITALITY CORPORATION
(hereinafter called the "Holder") is entitled to purchase from PEGASUS SYSTEMS,
INC., a Delaware corporation (hereinafter called the "Company"), upon the
surrender of this Warrant to the Company at the principal office in Dallas,
Texas, at any time on and after May 13, 1997 (the "Detachment Date"), and
before the close of business on May 12, 1999 (the"Termination Date"), the
number of fully paid and nonassessable shares of Common Stock, par value $.01
per share ("Common Stock"), set forth above, evidenced by a certificate
therefor, upon payment of the lesser of $9.60 per share or 85% of the initial
public offering price per share of the Company's Common Stock (the "Warrant
Price") for the number of shares set forth herein above; provided, however,
that under certain conditions set forth hereinafter, the number of shares of
Common Stock purchasable upon the exercise of this Warrant may be increased or
reduced and the Warrant Price may be adjusted. The Warrant Price shall be
payable in cash, or by certified or official bank check, in United States
dollars, to the order of the Company. No adjustment shall be made for any cash
dividends on any shares of stock issuable upon exercise of this Warrant. The
right of purchase represented by this Warrant is exercisable by Holder, its
parent, subsidiary, affiliate or any other successor to all or substantially all
of its business by sale of stock, sale of assets, merger or otherwise only, in
its entirety only and only in respect of all of such shares. In the event this
Warrant has not been exercised as required herein before the close of business
on the Termination Date, it shall automatically terminate and be of no force
and effect.
Subject to the provisions hereof, Holder shall have the right
to purchase from the Company (and the Company shall issue and sell to Holder)
the number of fully paid and nonassessable shares of Common Stock specified in
this Warrant, upon surrender of this Warrant to the Company at its office in
Dallas, Texas and upon payment to the Company of the Warrant Price for the
number of shares of Common Stock for which this Warrant is issued and any
applicable taxes. Upon surrender of this Warrant, and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to Holder a certificate for the number of full shares of
Common Stock so purchased upon the exercise of this Warrant. Such certificate
shall be deemed to have been issued and Holder shall be deemed to have become a
holder of record of such shares as of the date of the surrender of this Warrant
and payment of the Warrant Price as aforesaid. The rights of purchase
represented by this Warrant shall be exercisable, at the election of Holder,
once only for all and not less than all of the shares specified herein and, in
the event this Warrant is exercised in respect of less than all of the shares
specified therein such exercise shall be invalid and of no force or effect.
There have been reserved, and the Company shall at all times keep
reserved, out of the authorized and issued shares of Common Stock, a number of
shares sufficient to provide for the exercise of the rights of purchase
represented by this Warrant, and the transfer Agent for the Common Stock and
every subsequent Transfer Agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid are
hereby irrevocably
-1-
<PAGE> 2
authorized and directed at all times to reserve such number of authorized and
unissued shares as shall be requisite for such purpose.
The Warrant Price and number of shares subject to this Warrant shall
be subject to adjustment from time to time as follows:
a. In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the Warrant
Price in effect immediately prior to such subdivision shall be proportionately
reduced and, in case the outstanding shares of the Common Stock of the Company
shall be combined into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall be proportionately increased.
b. Upon each adjustment of the Warrant Price pursuant to
the provisions hereof, the number of shares issuable upon the exercise of this
Warrant shall be adjusted by multiplying the Warrant Price in effect prior to
the adjustment by the number of shares of Common Stock covered by the Warrant
and dividing the product so obtained by the adjusted Warrant Price.
c. Except upon consolidation or reclassification of the shares of
Common Stock of the Company as provided for in subsections (a) or (f) hereof,
the Warrant Price in effect at any time may not be adjusted upward or increased
in any manner whatsoever.
d. Irrespective of any adjustment or change in the Warrant Price
or the number of shares of Common Stock actually purchasable under this
Warrant, this Warrant shall continue to express the Warrant Price per share and
the number of shares purchasable hereunder as the Warrant Price per share and
the number of shares purchasable were expressed in this Warrant when initially
issued with the adjustment or change reflected as set forth in subsection (g)
hereof.
e. If any capital reorganization or reclassification of the
capital stock of the Company or consolidation or merger of the Company with
another corporation or the sale of all or substantially all of its assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby Holder shall have the right to
purchase and receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by each such Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of shares
of such Common Stock purchasable upon the exercise of the rights represented by
this Warrant had such reorganization, reclassification, consolidation, merger
or sale not taken place, and in any such case appropriate provisions shall be
made with respect the rights and interests of Holder to the end that the
provisions hereof (including without limitation provisions for adjustment of
the Warrant Price and of the number of shares purchasable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may be in relation
to the shares of stock thereafter deliverable upon the exercise of this
Warrant.
-2-
<PAGE> 3
f. No adjustment of the Warrant Price shall be made in connection
with the issuance or sale of Common Stock issuable pursuant to any stock option
plan or incentive compensation arrangements now or hereafter granted to
employees of the Company or any of its subsidiaries in connection with their
employment or the issuance or sale of shares of Preferred Stock.
g. Whenever the Warrant Price is adjusted as herein provided,
the Company shall provide a written statement to Holder showing in detail the
facts requiring such adjustment and the Warrant Price and the number of shares
of Common Stock purchasable upon exercise of this Warrant after such
adjustment.
h. The Company may retain a firm of independent certified
public accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) selected by the Board of
Directors of the Company or the Executive Committee of said Board to make any
computation required hereunder and a certificate signed by such firm shall be
conclusive evidence of the correctness of any such computation. If Holder does
not agree as to the correctness of such computation. Holder at their own
expense may retain a firm of independent certified public accountants of
recognized standings to develop a second computation. Such accounting firms
shall attempt to resolve any differences of opinion with respect to such
computations, but in the absence of such resolution, the matter shall be
submitted to binding arbitration in Dallas, Texas in accordance with the then
applicable rules of the American Arbitration Association.
Notwithstanding any other provision hereof, to the extent permitted
by applicable law, the Company shall provide written notice to Holder at least
ten (10) days prior to the record date or other effective date for any of the
following actions: dividends, mergers, liquidations, consolidations,
reclassifications of stock, sale of substantially all of the assets or any
other action for which stockholder approval is required by Delaware law.
The Company shall issue a new warrant to be issued in place of this
Warrant in the event this Warrant has been lost, stolen, defaced, worn-out,
or destroyed, upon the making of an affidavit of that fact by Holder. When
issuing a new warrant, the Company may, as a condition precedent thereto, (a)
require the Holder of a defaced or worn out warrant to deliver such warrant to
the Company and order the cancellation of the same, and (b) require the Holder
of any lost, stolen or destroyed warrant or its legal representative, to
advertise the same in such manner as the Company shall require and to give the
Company a bond in such sum as it may direct as indemnity against any claim that
may be made against the Company with respect to the warrant alleged to have
been lost, stolen or destroyed. Thereupon, the Company may cause to be issued to
Holder a new warrant in replacement for the warrant alleged to have been lost,
stolen, defaced, worn out or destroyed. Upon the new warrant so issued shall be
noted the fact of such issue and the number, date, and name of the registered
Holder of the lost, stolen, defaced, worn out, or destroyed warrant in lieu of
which the new warrant is issued. Every warrant issued hereunder shall be issued
without payment to the Company for such warrant, provided that, there shall be
paid to the Company a sum equal to any exceptional expenses incurred by the
Company in providing for or obtaining any such indemnity and security as is
referred to herein.
-3-
<PAGE> 4
Notwithstanding any other provision hereof, in the event this
Warrant is exercised in connection with an initial public offering of the
Company's stock or the sale of the Company, such exercise may be conditioned
upon and subject to the consummation of such initial public offering or sale.
The Company shall not be required to issue fractions of shares
of Common Stock on the exercise or conversion of this Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this paragraph,
be issuable on the exercise or conversion of this Warrant, the Company shall
purchase such fraction for an amount in cash equal to the current fair market
value of such fraction.
The right to exercise this Warrant and purchase the stock as
provided herein is expressly contingent upon and conditioned upon Holder being
in material compliance with all of the material terms of that certain
Distribution Services Agreement for Holiday Inn Worldwide between the Company
and Holder and further provided that Holder has not terminated any of the
Services (as defined therein), unless as a result of a breach of the Agreement
by the Company, as of the exercise of this Warrant.
Except as otherwise provided herein, nothing contained in this
Warrant shall be construed as conferring upon Holder the right to vote or to
consent or to receive notice as a stockholder in respect of the meetings of
stockholders for the election of directors of the Company or any other matters,
or any rights whatsoever as a stockholder of the Company.
Any notice pursuant to this Warrant to be given or made by Holder or
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, or by next day delivery service for personal delivery,
addressed (until another address is provided in writing by the Company or
Holder) as follows with a copy to the Company's or Holder's legal departments:
President Senior Vice President, Worldwide Reservations
Pegasus Systems, Inc. Holiday Hospitality Corporation
3811 Turtle Creek Boulevard Three Ravinia Drive
Suite 1100 Suite 2900
Dallas, Texas 75219 Atlanta, Georgia 30346
All the covenants and provisions of this Warrant by or for the benefit
of the Company or Holder shall bind and inure to the benefit of their respect
successors and assigns hereunder.
This Warrant shall be deemed to be a contract made under the laws of
the State of Texas and for all purposes shall be construed in accordance with
the laws of said State.
Nothing herein shall be construed to give to any person or
corporation other than the Company and Holder any legal or equitable right,
remedy or claim hereunder, but the terms of this Warrant shall be for the sole
and exclusive benefit of Holder and the Company.
Except as otherwise provided herein, this Warrant is not transferable.
-4-
<PAGE> 5
In connection with the exercise of this Warrant, Holder agrees to
execute the Investment Representative Statement (or a substantially similar
document) attached hereto as Exhibit A.
IN WITNESS WHEREOF, this Warrant is hereby executed by the President
and Secretary of Pegasus Systems, Inc. as the act of the Company.
Date: May 27, 1997
PEGASUS SYSTEMS, INC.
By: /s/ JOHN F. DAVIS, III
----------------------------------
John F. Davis, III, President
ATTEST:
By: /s/ RIC L. FLOYD
----------------------------------
Ric L. Floyd, Secretary
-5-
<PAGE> 6
INVESTMENT REPRESENTATION STATEMENT
In connection with the exercise of Warrant Number 1 of Pegasus
Systems, Inc. and the purchase of the Securities described therein, the
undersigned Holder represents to the Company the following:
(a) Holder is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Holder is acquiring these Securities for investment for Holder's own account
only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Holder acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Holder's investment intent as expressed herein. Holder further
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Holder further acknowledges and understands that the
Company is under no obligation to register the Securities. Holder understands
that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or
such registration is not required in the opinion of counsel satisfactory to the
Company and any other legend required under then applicable state or federal
securities laws.
(c) Holder is familiar with the provisions of Rule 701
and Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the issuance of the Warrant to the
Holder, the exercise will be exempt from registration under the Securities Act.
In the event the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701
may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including: (1) the resale being made through a broker in
an unsolicited "brokers transaction" or in transactions directly with a market
maker (as said term is defined under the Exchange Act); and, in the case of an
affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.
-6-
<PAGE> 7
EXHIBIT "A"
TO
COMMON STOCK PURCHASE WARRANT
In the event that the Company does not qualify under Rule 701
at the time of issuance of the Warrant, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than one year after the later of the date
the Securities were sold by the Company or the date the Securities were sold by
an affiliate of the Company, within the meaning of Rule 144; and, in the case
of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Holder further understands that in the event all of
the applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A under the Securities Act
or some other registration exemption will be required; and that, notwithstanding
the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing to
sell private placement securities other than in a registered offering and
otherwise than pursuant to Rules 144 or 701 will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Holder understands
that no assurances can be given that any such other registration exemption will
be available in such event.
HOLIDAY HOSPITALITY CORPORATION, HOLDER
By:
-------------------------------------
Its:
-------------------------------
Date:
-------------------------
-7-
