EXHIBIT 10.16
PURCHASE AGREEMENT
BY AND AMONG
PEGASUS SOLUTIONS, INC.
GLOBAL ENTERPRISE TECHNOLOGY SOLUTIONS, LLC
ENTERPRISE HOSPITALITY SOLUTIONS, INC.
THE RIVADALLA FAMILY TRUST
AND CHRISTIAN RIVADALLA
Dated as of October 31, 2000
TABLE OF CONTENTS
ARTICLE 1 Transaction Terms 1
1.1 Purchase and Sale of Interest in GETS 1
1.2 Future Options to Purchase Interests in GETS 1
1.3 Initial Closing 3
1.4 Deliveries at the Initial Closing 3
1.5 Deliveries at Any Subsequent Closings 3
1.6 Member Representative for the Members 4
ARTICLE 2 Representations and Warranties of GETS,
the Members and Rivadalla 4
2.1 Organization in Good Standing 5
2.2 Affiliates 5
2.3 Power, Authorization and Execution 5
2.4 No Conflict 6
2.5 Membership Interest Restrictions 6
2.6 Litigation 6
2.7 Financial Statements; Undisclosed Liabilities 6
2.8 Tax Matters 7
2.9 Title to Assets 8
2.10 Absence of Changes 9
2.11 Contracts and Commitments 10
2.12 Compliance with Laws; Permits 12
2.13 Accounts Receivable; Evidence of Indebtedness 13
2.14 Certain Transactions and Agreements 13
2.15 Employees 13
2.16 Insurance 14
2.17 Customers and Suppliers 15
2.18 Bank Accounts and Powers of Attorney 15
2.19 Invention Assignment and Confidentiality Agreement 15
2.20 Intellectual Property 15
2.21 Books and Records 17
2.22 Compliance with Law and Charter Documents 17
2.23 Environmental Matters 17
2.24 Investment Banking and Finder Fees 18
2.25 Disclosure 18
2.26 Members' Representations Regarding Pegasus Stock 18
2.27 Further Limitations on Disposition of Pegasus
Common Stock 19
ARTICLE 3 Representations and Warranties of Pegasus 20
3.1 Incorporation and Good Standing 20
3.2 Authority 21
3.3 Enforceability of Obligations 21
3.4 No Conflict 21
3.5 Investment Banking and Finder Fees 21
3.6 Pegasus Common Stock 21
3.7 Disclosure 21
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ARTICLE 4 Conduct of Business 22
4.1 Conduct of Business 22
4.2 Access to Books and Records 24
ARTICLE 5 Additional Agreements and Covenants 24
5.1 GETS's Manager and Membership Interests 24
5.2 Software Development Agreement 24
5.3 Consents 25
5.4 Intellectual Property Rights of Members 25
5.5 Restrictions on Negotiations with Third Parties 25
5.6 Notice of Certain Matters 25
5.7 Confidential Information 26
ARTICLE 6 Conditions to Initial Closing and Subsequent Closings 27
6.1 Conditions to Each Party's Obligation to Effect
the Transaction 27
6.2 Conditions to Pegasus' Obligation 28
6.3 Conditions to GETS's and the Members' Obligations 29
ARTICLE 7 Post Closing Covenants 30
7.1 General 30
7.2 Litigation Support 30
7.3 Covenant Not to Compete 30
7.4 Assignment of Membership Interests Acquired
by Pegasus 31
7.5 Consents 32
ARTICLE 8 Indemnification 32
8.1 Indemnification Provisions for Benefit of Pegasus 32
8.2 Indemnification Provisions for Benefit of GETS
and the Members 32
8.3 Procedure for Matters Involving Third Parties 32
8.4 Notice of Claim 33
8.5 Exclusive Remedy 33
ARTICLE 9 Termination 33
9.1 Termination 33
9.2 Effect of Termination 33
9.3 Fees and Expenses 34
9.4 Prompt Notice 34
ARTICLE 10 General Provisions 34
10.1 Survival of Representations, Warranties and Covenants 34
10.2 Press Releases and Announcements 35
10.3 Notices 35
10.4 Arbitration 36
10.5 Waiver; Amendment 36
10.6 Assignment 36
10.7 Severability 36
10.8 Time of Essence 37
10.9 Entire Agreement 37
10.10 Interpretation 37
10.11 Counterparts 37
10.12 Governing Law 37
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DEFINED TERMS
AAA 36 Party 1
Acquisition Proposal 25 Pegasus 1
Agreement 1 Pegasus Ancillary Agreements 21
Assets 9 Pegasus Consideration 20
Authorized Persons 26 Pegasus Representatives 24
Balance Sheet Date 6 Permits 12
CERCLA 17 Permitted Transferee 20
Claim Notice 33 Person 6
Closing Price 1 Plans 14
Code 7 Predecessor 5
Confidential Information 26 Proprietary Assets 16
Conflict 6 Receivables 13
Consent 6 Receiving Party 26
Disclosing Party 26 release 17
disposal 17 Rivadalla Trust 1
EHS 1 Second Option 2
Employment Agreements 29 the Second Option Closing Price 2
Financial Statements 7 Securities Act 25
First Option 1 Software 16
First Option Closing Price 2 Subsequent Closing 2
GAAP 7 Tax Affiliate(s) 7
GETS 1 Tax 8
GETS Affiliates 5 Taxes 7
GETS Ancillary Agreements 5 Third Party Claim 33
GETS Member Affiliates 13 threatened release 17
Governmental Entity 6 WARN Act 13
Group 25
Hazardous Materials 17
Hearing 36
HRS Act 27
Indemnified Party 33
Indemnifying Party 33
Initial Closing 3
Initial Closing Date 3
Initial Membership Interest 1
Injunction 28
IRS 14
Laws 12
Liens 5
Lodging Touch 10
Member Representative 4
Members 1
Options 2
Parties 1
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LIST OF SCHEDULES
2.1 List of all names used by GETS or any Predecessor of GETS or GETS
Affiliates during the past 5 years
2.2 List of all GETS Affiliates
2.4 Conflicts of GETS to the execution and delivery of the Agreement or
GETS Ancillary Agreements
2.6 GETS Litigation
2.8 Tax Matter exceptions of GETS
2.9(d) Tangible Assets of GETS and GETS Affiliates not in good condition
and repair
2.10 Absence of Changes
2.11(a) List of contracts and commitments of GETS and GETS Affiliates
2.11(b) Obligations in connection with contracts or commitments not
performed by GETS, GETS Affiliates and their respective Predecessors
2.11(c) Notices required to be delivered to any Person under any contract or
commitment
2.11(d) Contracts or commitments containing provisions requiring termination
in the event of a change of control or change in ownership of GETS
or GETS Affiliates
2.11(e) Contracts or commitments of GETS and GETS Affiliates
2.11(f) Business contracts with any Governmental Entity of GETS and GETS
Affiliates
2.12 Laws not complied with by GETS or GETS Affiliates
2.13 List of Receivables of GETS and GETS Affiliates
2.14 List of Member Affiliate Transactions
2.15 Employee Listing
2.15(a) Complete list of Plans of GETS and GETS Affiliates
2.15(c) Labor Matters
2.16 Insurance policies of GETS and GETS Affiliates
2.17 Twenty largest customers and twenty largest suppliers of GETS and
GETS Affiliates
2.18 List of banks, savings institutions and other financial institutions
of GETS and GETS Affiliates and each Person holding power of
attorney on behalf of each account
2.20(a) List of Software and Proprietary Assets of GETS
2.20(e) Transactions contemplated by this Agreement that have a material
adverse effect on GETS's right, title and interest in and to the
Proprietary Assets
4.1(e) List of key management and personnel of GETS to be considered for
employee incentive plans
<PAGE>
LIST OF EXHIBITS
1.4.1 Certificate of Ownership representing the Initial Membership
Interest purchased by Pegasus
1.4.2 Software Development and License Agreement
1.4.3 Resolution and Agreement of the Members approving the transaction
1.4.4 Investment Representation Letter
1.5 Certificate by the Members, Rivadalla and GETS reconfirming the
representations, warranties and covenants upon the closing of the
Second Option
2.7 Financial Statements of EHS and Unaudited balance sheet of GETS
2.9(a) Office Lease
2.9(b) Exceptions to good and valuable title of tangible properties and
assets of GETS and GETS Affiliates
2.19 Invention Assignment and Confidentiality Agreement
5.4 Assignment of GETS Affiliates, the Members and Rivadalla of all
intellectual property rights in the Software or Proprietary Assets
of GETS to GETS
6.2(d) GETS Amendment to Articles of Organization and Amended Operating
Agreement
6.2(f) Legal Opinion of Watland, Allen & Lasee, PLLC
6.2(h) Assignment and Assumption Agreements from EHS to GETS
6.2(j) Employment Agreements
7.5 Consents
<PAGE>
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is entered into as of October 31,
2000 by and between Pegasus Solutions, Inc., a Delaware corporation
("Pegasus") and Global Enterprise Technology Solutions, LLC, an Arizona
limited liability company ("GETS"), and Enterprise Hospitality Solutions,
Inc., an Arizona corporation, ("EHS") and Rivadalla Family Trust,
("Rivadalla Trust") (EHS and Rivadalla Trust are collectively referred to
as the "Members"), and Christian Rivadalla ("Rivadalla"). Pegasus, GETS,
Rivadalla and the Members are sometimes referred to herein collectively as
the "Parties" or individually as a "Party".
RECITALS
A. Whereas, the Members own 100% of GETS;
B. Whereas, Pegasus wishes and intends to purchase from the Members,
and the Members wish to sell to Pegasus, all right, title and interest in
GETS pursuant to the terms and conditions set forth in this Agreement.
AGREEMENT
Now, therefore, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties,
covenants, agreements and understandings herein contained, the Parties agree
as follows:
ARTICLE 1
Transaction Terms
1.1 Purchase and Sale of Interest in GETS. Pegasus agrees to purchase
and acquire from the Members and the Members agree to sell, transfer,
assign, convey and deliver to Pegasus at the Initial Closing, all right,
title and interest in and to twenty percent (20%) ownership interest in
GETS, ("Initial Membership Interest"). For the Initial Membership Interest,
Pegasus agrees to pay the Members $2 Million in cash and to deliver to the
Members the number of shares of Pegasus common stock that equal $3 Million
based on the average per share closing sale price of the Pegasus common
stock for the five (5) market trading days preceding the date that is three
(3) days before the date of the Initial Closing (the "Closing Price"). The
Pegasus common stock issued to the Members at the Initial Closing will be
unregistered and no ownership, interest or rights in the stock may be sold,
transferred or conveyed by the Members for a period of one year from the
date of issuance.
<PAGE>
1.2 Future Options to Purchase Interests in GETS.
(a) In addition to the Initial Membership Interest, the Members
hereby grant to Pegasus the right exercisable at any time before the first
anniversary date of the Initial Closing to purchase an additional twenty
percent (20%) interest in GETS (referred to as the "First Option") at the
First Option Closing, resulting in an aggregate ownership of GETS by Pegasus
totaling forty percent (40%). Upon the exercise of the First Option,
Pegasus will deliver to the Members, within 30 days after notice of the
exercise of the First Option, $2 Million cash and shares of Pegasus common
stock that equal $3 Million based on the Closing Price, provided that the
value of the Pegasus common stock paid at the date of the closing of the
First Option shall not be less than $3 Million and shall not exceed
$5,250,000, determined by the following formula: (a) the number of shares
issued at the Initial Closing, increased as follows: (b) if the average per
share closing sales price of the Pegasus common stock for the five (5)
market trading days preceding the date that is three (3) days before the
date of the First Option Closing (the "First Option Closing Price") is less
than the Closing Price, the number of shares issued at the First Option
Closing shall be increased so that the product of the number of shares
issued at the First Option Closing multiplied by the First Option Closing
Price equals $3 Million; and decreased as follows: (c) if the First Option
Closing Price is greater than the Closing Price, and the product of the
number of shares issued at the Initial Closing multiplied by the First
Option Closing Price equals more than $5,250,000, the number of shares
issued at the First Option Closing shall be decreased so that the product of
the number of shares issued at the First Option Closing multiplied by the
First Option Closing Price equals $5,250,000.
(b) In addition to the Initial Membership Interest and the
interest purchased at the First Option Closing, the Members hereby grant to
Pegasus the right, exercisable at any time after (or simultaneously with)
the First Option and before the second anniversary date of the Initial
Closing to purchase the final sixty percent (60%) interest in GETS (referred
to as the "Second Option") at the Second Option Closing, resulting in
Pegasus owning a one hundred percent (100%) interest in GETS. Upon the
exercise of the Second Option, Pegasus will deliver to the Members, within
30 days after notice of the exercise of the Second Option, $4 Million cash
and shares of the Pegasus common stock that equal $6 Million based on the
Closing Price, provided that the value of the Pegasus common stock paid at
the date of the closing of the Second Option shall not be less than $6
Million and shall not exceed $10,500,000, determined by the following
formula: (a) the number of shares issued at the Closing, increased as
follows: (b) if the average per share closing price of the Pegasus common
stock for the five (5) market trading days preceding the date that is thee
(3) days before the date of the Second Option Closing (the "Second Option
Closing Price") is less than the Closing Price, the number of shares issued
at the Second Option Closing shall be increased so that the product of the
number of shares issued at the Second Option Closing multiplied by the
Second Option Closing Price equals $6,000,000; and decreased as follows: (c)
if the Second Option Closing Price is greater than the Closing Price, and
the product of the number of shares issued at the Initial Closing multiplied
by the Second Option Closing Price equals more than $10,500,000, the number
of shares issued at the Second Option Closing multiplied by the Second
Option Closing Price equals $10,500,000.
<PAGE>
(c) The First Option and Second Option are collectively referred
to as the "Options". Each Option is exercisable at any time before the
expiration of such Option, provided however that the Second Option must be
exercised after, or simultaneously with, the First Option. The closing of
any of the Options are each individually referred to as a "Subsequent
Closing". Pegasus will have the right upon the exercise of any Option to
deliver cash equal to all or a portion of the value of Pegasus common stock
in lieu of Pegasus common stock.
1.3 Initial Closing. The Initial Closing shall take place on or before
October 31, 2000, at 10:00 a.m. Dallas, Texas time ("Initial Closing Date")
at the Dallas offices of Pegasus, or at such other time and place as the
Parties may mutually agree upon (which time and place are referred to in
this Agreement as the "Initial Closing").
1.4 Deliveries at the Initial Closing. At the Initial Closing, the
Members shall deliver to Pegasus: (i) a certificate of ownership in the form
attached hereto as Exhibit 1.4.1 representing the Initial Membership
Interest purchased by Pegasus; (ii) a fully executed Software Development
and License Agreement in the form attached hereto as Exhibit 1.4.2; (iii) a
resolution and agreement of the Members approving the transactions
contemplated by this Agreement in the form attached hereto as Exhibit 1.4.3;
(iv) an investment representation letter in the form attached hereto as
Exhibit 1.4.4 executed by each of the Members; and (v) the various
certificates, instruments and documents referred to in Articles 2 and 5. At
the Initial Closing, Pegasus shall deliver to the Member Representative for
the benefit of the Members: (i) a wire transfer or check in the amount of $2
Million payable to the Member Representative; (ii) a certificate in the name
of the Member Representative representing the number of Pegasus shares of
common stock that equal $3 Million at the Closing Price; (iii) written
termination of the bridge loans advanced by Pegasus to GETS and related
agreements; and (iv) the various certificates, instruments and documents
referred to in Article 3.
1.5 Deliveries at Any Subsequent Closing.
(a) In the event Pegasus shall exercise the First Option to
purchase an additional twenty percent (20%) interest in GETS, Pegasus will
deliver to the Member Representative for the benefit of the Members, within
30 days after notice of the exercise of the First Option, (i) $2 Million
cash by check or wire transfer and (ii) a certificate in the name of the
Member Representative representing the number of shares of Pegasus common
stock required by Section 1.2(a).. Upon the exercise of the First Option,
Rivadalla, GETS and the Members shall deliver to Pegasus (i) a certificate
in the form attached hereto as Exhibit 1.4.1 in the name of Pegasus
representing an additional twenty percent (20%) interest in GETS duly
endorsed for transfer and conveyance to Pegasus and (ii) a certificate in
the form attached hereto as Exhibit 1.5 signed by the Members, Rivadalla and
GETS stating that the representations, warranties, and covenants set forth
in this Agreement are reconfirmed upon the closing of the exercise of the
First Option.
<PAGE>
(b) In the event Pegasus shall exercise the Second Option to
purchase an additional sixty percent (60%) interest in GETS, Pegasus will
deliver to the Member Representative for the benefit of the Members, within
30 days after the notice of the exercise of the Second Option, (i) $4
Million cash by check or wire transfer and (ii) a certificate in the name of
the Member Representative representing the number of shares of Pegasus
common stock required by Section 1.2(b).. Upon the exercise of the Second
Option, Rivadalla, GETS and the Members shall deliver to Pegasus (i) a
certificate in the form attached hereto as Exhibit 1.4.1 in the name of
Pegasus representing an additional sixty percent (60%) interest in GETS duly
endorsed for transfer and conveyance to Pegasus and (ii) a certificate in a
form attached hereto as Exhibit 1.5 signed by the Members, Rivadalla and
GETS stating the representations, warranties, and covenants set forth in
this Agreement are reconfirmed upon the closing of the exercise of the
Second Option.
(c) The Pegasus common stock issued to the Members upon the
exercise of the First Option and/or the Second Option will be unregistered
and no ownership, interest or rights in the stock may be sold, transferred
or conveyed by the Members for a period of one year from the date of
issuance. The parties agree and acknowledge that $100,000 of the total
purchase price shall be allocated as payment for the Covenant Not To
Compete, as set forth in Section 7.3 of this Agreement.
1.6 Member Representative for the Members.
Christian Rivadalla shall be appointed as agent and attorney-in-fact
(the "Member Representative") for each Member, for and on behalf of the
Members, to give and receive notices and communications, to receive and
deliver amounts of cash and shares of Pegasus common stock to the Members as
required at the Initial Closing or any Subsequent Closing, and to take all
actions necessary or appropriate in the judgment of Member Representative
for the accomplishment of the foregoing.
(a) The Member Representative shall not be liable for any act
done or omitted hereunder as Member Representative while acting in good
faith and in the exercise of reasonable judgment. The Members shall jointly
and severally indemnify the Member Representative and hold the Member
Representative harmless against any loss, liability or expense incurred
without negligence or bad faith on the part of the Member Representative and
arising out of or in connection with the acceptance or administration of the
Member Representative's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Member Representative.
(b) A decision, act, consent or instruction of the Member
Representative shall constitute a decision of all the Members for and shall
be final, binding and conclusive upon each of the Members, and Pegasus may
rely upon any such decision, act, consent or instruction of the Member
Representative as being the decision, act, consent or instruction of each of
the Members.
<PAGE>
(c) Pegasus shall not be liable to the Member Representative, the
Members or any person for any act done or omitted hereunder by the Member
Representative and for any acts done by it in accordance with the decision,
act, consent or instruction of the Member Representative if given or
confirmed in writing signed by the Member Representative. The Member
Representative shall jointly and severally indemnify Pegasus and hold
Pegasus harmless against any loss, liability or expense arising out of or in
connection with the disbursement of cash or shares of Pegasus common stock
by the Member Representative, including the reasonable fees and expenses of
any legal counsel retained by the Member Representative.
ARTICLE 2
Representations and Warranties of GETS, the Members and Rivadalla
GETS, each of the Members and Rivadalla hereby jointly and severally
represent and warrant to Pegasus, as of the date hereof and as of the date
of the Initial Closing and each Subsequent Closing, as follows:
2.1 Organization and Good Standing. GETS is a limited liability
corporation duly organized, validly existing and in good standing under the
laws of the State of Arizona and has the corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. Set forth on Schedule 2.1 is a listing of all names used by GETS
or by any affiliated or predecessor companies of GETS or GETS Affiliates (a
"Predecessor") during the past five (5) years, including the names of any
entities from whom GETS acquired or conveyed material assets during such
period, and of all names under which GETS or GETS Affiliates does or has
done business during such period.
2.2 Affiliates. Schedule 2.2 sets forth all corporations,
partnerships, joint ventures, associations, limited liabilities companies or
any other entities affiliated with or owned in whole or in part or
controlled, directly or indirectly, by GETS (collectively, the "GETS
Affiliates"). Except as set forth on Schedule 2.2, all ownership interests,
outstanding shares of capital stock or other equity securities of each GETS
Affiliate are owned and held of record and beneficially owned by GETS or the
GETS Affiliate free and clear of all liens, pledges, charges, claims,
security interests or other encumbrances ("Liens"). Each GETS Affiliate has
the corporate power to own its properties and to carry on its business as
now being conducted, is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and is
duly qualified or licensed to do business and in good standing as a foreign
corporation in each appropriate jurisdiction. Except as set forth on
Schedule 2.2 hereof, GETS does not have and has never had any affiliates or
subsidiaries and does not directly or indirectly own any equity interest in,
or any interest convertible into or exchangeable for any equity or similar
interest in, any corporation, partnership, limited liability company, joint
venture or other business association or entity.
<PAGE>
2.3 Power, Authorization and Execution.
(a) GETS, the Members and Rivadalla have all necessary right,
power and authority to enter into this Agreement and to fully perform this
Agreement and all other agreements and instruments to be executed by GETS
and/or the Members and/or Rivadalla as contemplated by this Agreement (the
"GETS Ancillary Agreements") and to carry out its obligations under this
Agreement and the GETS Ancillary Agreements. The execution, delivery and
performance of this Agreement and the GETS Ancillary Agreements have been
duly and validly authorized by all necessary corporate or other actions on
the part of GETS, the Members or Rivadalla, and no further action is
required on the part of GETS or the Members or Rivadalla to enter into and
perform the Agreement and the GETS Ancillary Agreements to which they are a
party and the transactions contemplated hereby and thereby.
(b) This Agreement has been, and at Initial Closing, the GETS
Ancillary Agreements to which GETS and/or the Members and/or Rivadalla are a
party will have been, duly executed and delivered to the other parties
hereto and thereto by GETS and/or the Members and/or Rivadalla and, assuming
the due authorization, execution and delivery by Pegasus, constitute (or, as
to GETS Ancillary Agreements, at Initial Closing will constitute) the valid
and binding obligations of GETS and/or the Members and/or Rivadalla as the
case may be, enforceable in accordance with their respective terms.
2.4 No Conflict. Except as set forth on Schedule 2.4, neither the
execution and delivery of this Agreement or GETS Ancillary Agreements nor
the consummation of the transactions provided for hereby or thereby will (a)
conflict with, result in any violation of or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict"), (b) result in any lien, claim,
encumbrance or interest upon any assets of GETS or any GETS Affiliate, or
(c) require any consent, waiver, approval, order of or notice, report,
registration, authorization, declaration or filing with (each a "Consent")
of any court, administrative agency or commission or other federal, state,
county, local or foreign governmental authority, instrumentality, agency or
commission ("Governmental Entity") or any other individual, corporation,
partnership, limited liability company, trust, unincorporated organization
or any other entity, or the executors, administrators or other legal
representatives of an individual in such capacity (each, a "Person," which
term shall include Governmental Entities).
2.5 Membership Interest Restrictions. There are no restrictions on the
Initial Membership Interest or any other membership interest purchased upon
the exercise of any of the Options and such may be transferred, assigned,
sold or otherwise conveyed, in whole or in part, by Pegasus at any time.
<PAGE>
2.6 Litigation. Except as set forth on Schedule 2.6, there are no
outstanding orders, judgments, injunctions, settlement agreements, awards or
decrees of any Person against GETS, GETS Affiliates, any asset of GETS or
against Rivadalla or any of the Members related to or regarding GETS or the
Intellectual Property. Except as set forth on Schedule 2.6 there is no
action, suit, proceeding, claim, application, complaint or investigation in
any court or before any arbitrator or before or by any regulatory body or
governmental or non-governmental body pending or threatened by or against
GETS, GETS Affiliates or the transactions contemplated by this Agreement
there is no factual or legal basis which could give rise to any such action,
suit, proceeding, claim, application, complaint or investigation under
applicable law. Except as set forth on Schedule 2.6, no Person has a claim
against GETS or any of its assets or against Rivadalla or GETS Members based
upon: (a) ownership or rights to ownership of GETS, (b) any rights as an
owner of GETS, including, without limitation, any option or other right to
acquire an ownership interest in GETS, any preemptive rights or any rights
to notice or to vote, or (c) any rights under any agreement between GETS and
any Member or any former holder of an ownership interest in GETS.
2.7 Financial Statements; Undisclosed Liabilities. GETS or EHS has
previously furnished to Pegasus, and Exhibit 2.7 includes, true, correct and
complete copies of the audited balance sheets of EHS as of December 31, 1999
and December 31, 1998, and the related statements of operations, Members'
equity and cash flows for the two (2) fiscal years ended December 31, 1999
and December 31, 1998 as audited by EHS's certified public accountants,
together with GETS's unaudited balance sheet and the related statements of
operations, Members' equity and cash flows for the nine-month period ended
September 30, 2000 ("Balance Sheet Date"), (collectively, the "Financial
Statements"). The Financial Statements (i) are consistent with the books
and records and accounting methods of EHS and/or GETS and are complete and
accurate in all material respects, (ii) to the best of Rivadalla's knowledge
with respect to the EHS financial statements fairly present the financial
position and results of operations of GETS as of the dates and for the
periods indicated and (iii) to the best of Rivadalla's knowledge with
respect to the EHS financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
throughout the periods involved, except for the absence of footnotes and
year-end adjustments in the case of the unaudited Financial Statements, none
of which is expected to be material in amount or significance and
information regarding such adjustments is included in Exhibit 2.7. Except
as set forth in the Financial Statements or otherwise set forth on Exhibit
2.7, to the best of Rivadalla's knowledge GETS does not have any material
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with GAAP) which (i) have not been reflected in or
reserved against in the Financial Statements, or (ii) have not arisen in the
ordinary course of business consistent with past practices since the Balance
Sheet Date. GETS and GETS Affiliates do not have any outstanding loans to
their respective officers, directors or employees, except for liabilities in
respect of reimbursable expenses incurred in the ordinary course of business
which do not exceed $5,000.00.
<PAGE>
2.8 Tax Matters. Except as set forth on Schedule 2.8:
(a) Each of GETS, GETS Affiliates, the Predecessors and
predecessors of GETS Affiliates (each, a "Tax Affiliate" and, collectively,
the "Tax Affiliates"), has: (i) timely filed after giving effect to any
applicable filing extension (or has had timely filed on its behalf) all
material returns, declarations, reports, estimates, information returns, and
statements ("Returns") required to be filed or sent by it in respect of any
Taxes (as defined below) or required to be filed or sent by it by any taxing
authority having jurisdiction, and all such Returns are accurate and
complete in all material respects; (ii) timely paid (or has had paid on its
behalf) all Taxes shown to be due and payable on such Returns; (iii) timely
paid all material Taxes which are due and payable or such Taxes are
reflected on the books of GETS as an accrued Tax liability determined in a
manner which is consistent with past practices and the Financial Statements,
without taking account of the transaction contemplated herein; (iv) complied
in all material respects with all applicable laws, rules, and regulations
relating to the withholding of Taxes and the payment thereof (including,
without limitation, withholding of Taxes under Sections 1441 and 1442 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any similar
foreign laws), and timely and properly withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws. For purposes of this
Agreement, the term "Taxes" means all taxes, charges, fees, levies, or other
assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, property, or other taxes,
customs duties, fees, assessments, or charges of any kind whatsoever,
including, without limitation, all interest and penalties thereon, and
additions to tax or additional amounts imposed by any taxing authority,
domestic or foreign, upon GETS or any Tax Affiliate and the term "Tax" means
any one of the foregoing Taxes.
(b) No deficiency for any Taxes has been proposed, and
communicated to GETS, and no such deficiency has been asserted or assessed
against GETS or any Tax Affiliate that has not been resolved and paid in
full. No waiver, extension or comparable consent given by GETS or any Tax
Affiliate regarding the application of the statute of limitations with
respect to any Taxes or Returns is outstanding, nor is any request for any
such waiver or consent pending. There is no Tax audit or other
administrative proceeding or court proceeding pending with regard to any
Taxes or Returns of GETS or any Tax Affiliate, nor has there been any notice
to GETS or any Tax Affiliate by any taxing authority regarding any such Tax,
audit or other proceeding, or is any such Tax audit or other proceeding
threatened with regard to any Taxes or Returns of GETS or any Tax Affiliate.
GETS does not expect the assessment of any additional Taxes with respect to
GETS or any Tax Affiliate and is not aware of any unresolved questions,
claims or disputes concerning the liability for Taxes of GETS or any Tax
Affiliate which would exceed the estimated reserves established on its books
and records.
<PAGE>
2.9 Title to Assets.
(a) GETS and GETS Affiliates own no real property.
Exhibit 2.9(a) sets forth is a copy of the lease agreement related to the
real property currently leased by GETS and GETS Affiliates. Such lease is
in full force and effect, is valid and effective in accordance with its
terms, and there is not, under such lease, any existing default or event of
default (or event which with notice or lapse of time, or both, would
constitute a default) with respect to GETS or any GETS Affiliate, any other
party to such lease. To the best of Rivadalla's knowledge, there is no
pending or threatened condemnation, expropriation, eminent domain or similar
proceeding affecting all or any part of such real property, and GETS has not
received any written notice of any of the foregoing matters set forth in
this Section 2.9(a). To the best of Rivadalla's knowledge, GETS is not in
violation of any material zoning, building, safety or environmental
ordinance, regulation or requirement or other law or regulation applicable
to the operation of leased properties, and GETS has not received any notice
of such violation with which it has not complied or has waived.
(b) Except as provided on Exhibit 2.9(b), GETS and GETS
Affiliates have good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of their respective
tangible properties and assets, real, personal and mixed, used or held for
use in their respective businesses, free and clear of any Liens, except (i)
as reflected in the Financial Statements, (ii) for Liens for taxes not yet
due and payable, and (iii) for Liens imposed by the owner of any leased real
or personal property other than any Liens which result from default under
any applicable lease agreement by GETS or GETS Affiliate.
(c) At the Initial Closing and each of the Subsequent
Closings, GETS will own or lease, or have the unrestricted right to use, all
of the assets and properties of every kind, character, and description,
whether tangible, intangible, real, personal or mixed, including but not
limited to contract rights, Proprietary Assets, permits, licenses and
registrations (collectively, the "Assets") owned, leased or employed by, or
necessary for the worldwide business of GETS or any of GETS Affiliates.
(d) Except as set forth on Schedule 2.9(d), all of the
tangible Assets necessary for the conduct of the business of GETS and GETS
Affiliates as currently conducted are in good condition and repair, ordinary
wear and tear excepted, and are usable in the ordinary course of business.
2.10 Absence of Changes. Since the Balance Sheet Date, except as set
forth on Schedule 2.10, there has not been, occurred or arisen any:
(a) transaction by GETS or GETS Affiliates except in
the ordinary course of business as conducted on that date and consistent
with prior practices;
(b) amendments or changes to the charter or other
organizational documents of GETS or GETS Affiliates;
(c) capital expenditure by GETS or GETS Affiliates
exceeding $50,000 in the aggregate;
(d) destruction of, damage to or loss of any assets of
GETS or GETS Affiliates (whether or not covered by insurance);
<PAGE>
(e) any pending or threatened claim of wrongful
discharge or other unlawful labor practice or action involving GETS or any
of GETS Affiliates;
(f) change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
GETS other than as required by GAAP or applicable laws;
(g) revaluation by GETS or GETS Affiliates of any
assets that are material to GETS or GETS Affiliates taken as a whole;
(h) declaration, setting aside or payment of any
distribution with respect to the ownership interests in GETS or any direct
or indirect purchase, sale or other transaction related to any ownership
interest in GETS;
(i) material increase in the salary or other
compensation payable or to become payable by GETS or GETS Affiliates to any
of their respective officers, directors, employees or advisors, or the
declaration, payment or commitment or obligation of any kind for the payment
by GETS or GETS Affiliates of a material bonus or other material additional
salary or compensation to any such person, in each case other than in the
ordinary course of business consistent with past practices;
(j) any termination, extension, material amendment or
material modification of the terms of any contract described in Section
2.11(a);
(k) sale, lease, license or other disposition of any of
the assets or properties of GETS or any of GETS Affiliates, or any creation
of any security interest in such assets or properties, in each case other
than in the ordinary course of business consistent with past practice;
(l) waiver or release of any right or claim, including
any write-off or other compromise of any account receivable other than in
the ordinary course of business;
(m) commencement or notice or threat of commencement of
any lawsuit, proceeding or investigation relating to GETS, GETS Affiliates
or any of their respective businesses;
(n) change in pricing or royalties set or charged by
GETS or GETS Affiliates to their respective customers or licensees or in
pricing or royalties set or charged by persons who have licensed Proprietary
Assets (as defined in Section 2.20(a)) to GETS or GETS Affiliates;
(o) incurrence of indebtedness for borrowed money or in
respect of capital leases, or any guarantee of such indebtedness (other than
interseller indebtedness or borrowings under an existing revolving credit
facility) other than in the ordinary course of business;
(p) Lodging Touch Systems International, Inc. ("Lodging
Touch") is no longer doing business effective as of December 31, 1999, and
there are no known existing liabilities of Lodging Touch that GETS is or may
be responsible for; or
(q) agreement by GETS or GETS Affiliates or any officer
or employees thereof to do any of the things described in the preceding
clauses (a) through (o).
<PAGE>
2.11 Contracts and Commitments.
(a) Schedule 2.11(a) sets forth a list of the following
agreements, whether oral or written, to which GETS, GETS Affiliates or their
respective Predecessors are a party, which are currently in effect, and
which relate to GETS, GETS Affiliates or any of their respective businesses:
(i) contracts for the employment of any Person that will be binding on GETS
after the Initial Closing Date or relating to severance pay for any Person;
(ii) confidentiality agreements, (iii) contracts, agreements or
understandings relating to an ownership interest in GETS or the election of
officers and/or a manager of GETS that will be binding on GETS after the
Initial Closing Date; (iv) agreements or indentures relating to the
borrowing of money or to mortgaging, pledging or otherwise placing a Lien on
any of the assets of GETS; (v) agreements of indemnification or guaranties
of any obligation for borrowed money or otherwise; (vi) leases or agreements
under which GETS or any GETS Affiliate is lessee of, or holds or operates
any personal property owned by any other party, for which the annual rental
exceeds $50,000; (vii) leases or agreements under which it is lessor of, or
permits any third party to hold or operate, any property, real or personal,
for which the annual rental exceeds $50,000; (viii) contracts or groups of
related contracts with the same party for the purchase of products or
services under which the undelivered balance of such products or services is
in excess of $50,000 per annum; (ix) contracts or group of related contracts
with the same party for the sale of products or services under which the
undelivered balance of such products or services has a sales price in excess
of $50,000; (x) contracts or groups of related contracts with the same party
(other than any contracts or groups of related contracts for the purchase or
sale of products or services) continuing over a period of more than six
months from the date or dates thereof, not terminable by GETS or any GETS
Affiliate on 30 days' or less notice without penalty and involving more than
$50,000; (xi) any agreements containing covenants to limit GETS's freedom to
compete in any line of business in any geographic area; (xii) any dealer,
distributor, sales representative, original equipment manufacturer, value
added remarketer or other agreements for the distribution of GETS's products
or services; (xiii) contracts or commitments for capital expenditures in
excess of $50,000; (xiv) any fidelity or surety bond or completion bond;
(xv) any agreements, contracts or commitments outside the ordinary course of
business relating to the disposition or acquisition of assets that are
material to GETS or GETS Affiliates taken as a whole or any interest in any
material business enterprise; (xvi) any purchase orders or contracts for the
purchase of materials or services involving in excess of $50,000; (xvii) any
distribution, joint marketing or development agreements involving in excess
of $50,000; (xviii) any other agreements, contracts or commitments involving
more than $50,000; (xix) any agreement relating to any joint venture or
strategic alliance to which GETS or GETS Affiliates or their respective
properties are subject; (xx) any agreement, including without limitation any
facilities leasing or sharing or employee leasing or sharing agreements,
with any GETS Affiliate, including the Members, (xxi) settlement agreements,
or (xxii) any other agreement which is either material to GETS's business or
was not entered into in the ordinary course of business.
<PAGE>
(b) Except as set forth on Schedule 2.11(b), GETS and
GETS Affiliates and their respective Predecessors (as to any obligation the
performance of which is binding on GETS) have performed all obligations
required to be performed by them in connection with the contracts or
commitments set forth on Schedule 2.11(a). Except as set forth on Schedule
2.11(b), neither GETS nor any GETS Affiliate is in receipt of any written
claim of default or failure to perform under any contract or commitment
required to be disclosed on such schedule. Neither GETS nor any GETS
Affiliate has any present expectation or intention of not fully performing
any obligation pursuant to any contract or commitment required to be
disclosed on Schedule 2.11(a). GETS and the Members have no knowledge of
any breach or anticipated breach by any other party to any contract or
commitment required to be disclosed on Schedule 2.11(a)
(c) Except as set forth on Schedule 2.11(c), no notices
are required to be delivered to any Person under any contract or commitment
required to be disclosed under Schedule 2.11(a) in connection with the
execution, delivery and performance of this Agreement and the completion of
the transactions contemplated by this Agreement.
(d) Except as set forth on Schedule 2.11(d), there are
no contracts or commitments that contain provisions requiring termination in
the event of a change of control or change in ownership of GETS or GETS
Affiliates and/or in the event of a change in the Members or officers of
GETS.
(e) GETS has specifically identified and made available
to Pegasus a true and correct copy of each written contract or commitment,
and a description of each oral contract or commitment, set forth on Schedule
2.11(e), together with all amendments, supplements, modifications, waivers
or other changes thereto.
(f) Except as set forth on Schedule 2.11(f), GETS and
GETS Affiliates have no business contracts with any Governmental Entity,
including any prime contractor of any Governmental Entity and any higher
level subcontractor of a prime contractor of any Governmental Entity, and
including any employees or agents thereof.
<PAGE>
2.12 Compliance with Laws; Permits.
(a) Except as set forth on Schedule 2.12 and except
where failure would not have a material adverse effect on GETS and its
operations, GETS and GETS Affiliates have complied with all laws,
ordinances, regulations and rules, and all orders, writs, injunctions,
awards, judgments and decrees (collectively, "Laws"), applicable to GETS and
GETS Affiliates or to the assets, properties and business of GETS and GETS
Affiliates, including, without limitation (i) all applicable federal and
state securities Laws and regulations, (ii) all applicable foreign, federal,
state and local Laws, pertaining to (A) the sale, licensing, leasing,
ownership or management of GETS and GETS Affiliates owned, leased or
licensed real or personal property, products or technical data, (B) labor
laws, employment or employment practices, terms and conditions of employment
or wages and hours, (C) safety, health, fire prevention, environmental
protection, building standards, zoning or other similar matters, (D) the
sale, licensing, ownership or any other aspect of intellectual property and
technology or (E) the Federal Corrupt Practices Act and regulations
promulgated hereunder or other laws, writs, injunctions, judgments or
decrees applicable to corrupt practices, (iii) the Export Administration Act
and regulations promulgated thereunder or other Laws, writs, injunctions,
judgments or decrees applicable to the export or re-export of controlled
commodities or technical data, or (iv) the Immigration Reform and Control
Act.
(b) GETS and GETS Affiliates have made all filings
with, and have in full force and effect, all licenses, permits and
certificates from, federal, state, local and foreign Governmental Entities
necessary to conduct their respective businesses (collectively the
"Permits"), and (ii) GETS, its Predecessors and GETS Affiliates have
conducted their respective businesses in compliance with all terms and
conditions of the Permits. GETS and GETS Affiliates are not relying on any
exemption from or deferral of any such applicable Law or other requirement
that, to the knowledge of GETS, would not be available to Pegasus.
(c) GETS and GETS Affiliates have not made or agreed to
make gifts of money, other property or similar benefits (other than
incidental gifts of articles of nominal value) to any actual or potential
customer, supplier, governmental employee or any other Person in a position
to assist or hinder GETS or GETS Affiliates in connection with any actual or
proposed transaction.
(d) No product liability, warranty or similar actions,
suits or proceedings have been asserted against GETS or any GETS Affiliate
since the Balance Sheet Date other than as set forth in the Financial
Statements.
<PAGE>
(e) Since the Balance Sheet Date, neither GETS nor any GETS
Affiliate has incurred any liability or obligation under the Worker
Adjustment and Retraining Notification Act the "WARN Act") or similar state
or foreign laws. GETS and GETS Affiliates have complied in all respects
with WARN or such state or foreign laws, and any regulations promulgated
thereunder, and do not expect to incur any such liability as a result of any
actions taken or not taken prior to the Closing. GETS or any GETS
Affiliates have not laid off more than ten percent (10%) of its employees at
any single site of employment in any ninety- (90-) day period during the
period from January 1, 2000 through the Closing Date. GETS and GETS
Affiliate has complied and is in compliance in all material respects with
the provisions of the Americans with Disabilities Act.
2.13 Accounts Receivable; Evidences of Indebtedness. Set forth on
Schedule 2.13 to this Agreement is a list of all accounts receivable,
promissory notes, contract rights, commercial paper, debt securities and
other rights to receive money ("Receivables") outstanding of GETS and GETS
Affiliates showing the name of the account debtor, maker or obligor, the
unpaid balance, the age of the Receivable and, if applicable, the maturity
date, the interest rate and the collateral securing the obligation. To the
best of Rivadalla's knowledge, all Receivables are legal, valid and binding
obligations of the obligors. Except as set forth on Schedule 2.13, GETS has
not (i) written off, cancelled, committed or become obligated to cancel or
write off any Receivables; (ii) disposed of or transferred any Receivables;
or (iii) acquired or permitted to be created any Receivables except in the
ordinary course of its business consistent with past practice.
2.14 Certain Transactions and Agreements. Except as set forth on
Schedule 2.14, no Person who is an officer or director of GETS, including
Rivadalla, or any of the Members of GETS (collectively, the "GETS Member
Affiliates") or a member of their immediate family is, (and no such Person
has any direct or indirect ownership interest in any other Person that is) a
client, supplier, customer, lessor, lessee of GETS or a GETS Affiliate or a
party to a contract required to be disclosed in Schedule 2.11(a) (except
with respect to any interest in less than 1% of the outstanding voting
shares of any corporation the stock of which is publicly traded). Except as
set forth on Schedule 2.14, no GETS Member Affiliate or member of their
immediate family, is directly or indirectly interested in any material
contract or informal arrangement with GETS, or a GETS Affiliate, except for
compensation for services as an officer, director, employee or consultant of
GETS or a GETS Affiliate and except for the normal rights of an owner of
GETS. Except at set forth on Schedule 2.14, none of GETS Member Affiliates
or their immediate family members has any interest in any property, real or
personal, tangible or intangible, including, without limitation, the
Proprietary Assets, used in the business of GETS or a GETS Affiliate, except
for the normal rights of a Member.
<PAGE>
2.15 Employees. Schedule 2.15 sets forth a list of all employees of
GETS and GETS Affiliates, along with each employee's respective title and
first date of employment of each employee with GETS or the respective GETS
Affiliates. GETS previously has made available annual compensation
information with respect to each such Person which is true and accurate.
GETS and GETS Affiliates (i) have withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to its
employees; (ii) are not liable for any arrears of wages or any material
penalty for failure to comply with any of the foregoing; and (iii) are not
liable for any material payment to any trust or other fund or to any
Governmental Entity, with respect to unemployment compensation benefits,
social security or other benefits or obligations for its employees (other
than routine payments to be made in the normal course of business and
consistent with past practice).
(a) Schedule 2.15(a) contains a complete list of "Plans"
consisting of each employment, severance or other similar contract,
arrangement or policy (written or oral) and each plan or arrangement
(written or oral) providing for insurance coverage, workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or deferred compensation, profit sharing, bonuses, stock
options, stock appreciation rights, stock purchases or other forms of
incentive compensation or post-retirement insurance, compensation or
benefits which is maintained or administered by GETS, or to which GETS
contributes, and which covers any employee or former employee of GETS or
under which GETS has any liability, including" employee welfare benefit
plan," "employee benefit plan" and "employee pension benefit plan" as
defined under ERISA;
(b) With respect to the Plans, GETS shall deliver to PEGASUS
prior to the Initial Closing, a copy of each Plan and any amendment(s)
thereto, together with (i) any written descriptions or summaries thereof,
(ii) all trust agreements, insurance contracts, annuity contracts or other
funding instruments, and (iii) the last two annual reports (IRS Form 5500
Series, together with all required schedules) prepared in connection with
any such Plan. The Plans comply, to the extent applicable, with the
requirements of ERISA and the Code, and any Plan intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service (the "IRS") to be so qualified;
(c) Except as set forth on Schedule 2.15(c), there are no
collective bargaining agreements to which GETS is a party or by which GETS
is bound. There are no strikes or labor disputes or lawsuits, unfair labor
or unlawful employment practice charges, contract grievances or similar
charges or actions pending or threatened by any of the employees, former
employees or employment applicants of GETS.
(d) No employee of GETS is obligated under any agreement or
judgment that would conflict with such employee's obligation to use his best
efforts to promote the interests of GETS or would conflict with GETS's
business as conducted or proposed to be conducted. No employee of GETS is in
violation of the terms of any employment agreement or any other agreement
relating to such employee's relationship with any previous employer and no
litigation is pending or threatened with regard thereto.
<PAGE>
2.16 Insurance. Schedule 2.16 sets forth the insurance policies of
GETS and GETS Affiliates and the expiration date of each policy, including
without limitation, fire and casualty, workers compensation, general
liability, "key-man" and other such insurance policies. GETS has no
knowledge that any such insurance policy will not be renewed in the normal
course or that the premiums therefore will be materially increased. No
insurance policies of GETS have been denied or coverage of such policy
reduced. There is no material claim by GETS or GETS Affiliates or any third
party pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All of such insurance policies are in full force and effect and are
issued by insurers of recognized responsibility.
2.17 Customers and Suppliers. Schedule 2.17 sets forth the twenty (20)
largest customers and the twenty (20) largest suppliers (each as measured by
revenues to GETS and GETS Affiliates on a consolidated basis) of GETS and
GETS Affiliates, taken as a whole, for the fiscal year ended December 31,
1999 and for the nine month period ended September 30, 2000 and sets forth
opposite the name of each such customer or supplier the approximate
percentage of net sales or purchases by GETS and GETS Affiliates
attributable to such customer or supplier for each such period. Except as
set forth on Schedule 2.17, there are no currently pending, or threatened
disputes between GETS and GETS Affiliates with their respective customers or
suppliers that could materially and adversely effect the relationship
between GETS and GETS Affiliates, on the one hand, and any of such customers
and suppliers on the other. Except as set forth on Schedule 2.17, to the
knowledge of GETS, no customer or supplier of GETS has expressed an
intention to cease doing business with GETS or GETS Affiliates prior to or
after the consummation of the transactions contemplated hereby. Except as
set forth on Schedule 2.17, since January 1, 2000, neither GETS nor any GETS
Affiliate has experienced any difficulties in obtaining any inventory items
necessary to the operation of its business, and no such shortage of supply
of inventory items is pending or threatened. Except as set forth on
Schedule 2.17, there are no other customers that are using the Software,
there are no obligations owed and there have been no representations made to
any other customer or Person by GETS or Rivadalla related to or regarding
the Software. GETS is not required to provide any bonding or other
financial security arrangements in any amount in connection with any
transactions with any of its customers or suppliers except in the ordinary
course of business consistent with commercial practice in GETS's industry.
2.18 Bank Accounts and Powers of Attorney. Schedule 2.18 sets forth
each bank, savings institution and other financial institution with which
GETS and any GETS Affiliate have an account or safe deposit box and the
names of all Persons authorized to draw thereon or to have access thereto.
Each Person holding a power of attorney or similar grant of authority on
behalf of GETS or any GETS Affiliate is set forth on Schedule 2.18. Except
as disclosed on such schedule, GETS and any GETS Affiliate have not given
any revocable or irrevocable powers of attorney to any Person relating to
its business for any purpose whatsoever.
2.19 Invention Assignment and Confidentiality Agreement. Each
employee, officer, consultant and contractor of GETS has entered into and
executed an Invention Assignment and Confidentiality Agreement in the form
attached to this Agreement as Exhibit 2.19 or an employee or consulting
agreement containing substantially similar terms.
<PAGE>
2.20 Intellectual Property.
(a) GETS has full title and ownership of, or has valid
license to, all technology, software, applications, inventions,
specifications, ideas, creations, business methods, databases, designs,
code, patents, patent applications, trademarks, trade dress, service marks,
trade names, copyrights, moral rights, mask works, trade secrets,
confidential and proprietary information, formulas, designs, proprietary
rights, know-how, show-how, processes, and any and all other confidential,
technical and other business information of any kind, nature or description
whatsoever including Software ("Software" is defined as the applications,
databases, designs, code and documentation developed and used by GETS for a
uses incorporating an Internet browser as a client and intended to be
operated as a centrally hosted service using Internet or intranet
communications and protocols which includes CRS, PMS, POS and similar
hospitality-based functionality) (all of the foregoing collectively
hereinafter referred to as the "Proprietary Assets" and identified on
Schedule 2.20(a)), without any conflict with or infringement of the rights
of others. Additionally, the Proprietary Assets identified on Schedule
2.20(a) constitute all intellectual property rights owned by GETS.
(b) There have been no claims made against GETS or
Rivadalla asserting the invalidity, misuse or unenforceability of the
Proprietary Assets and, there are no valid grounds for same.
(c) GETS or Rivadalla have received no notices of, and
is not aware of any facts which indicate a likelihood of, any infringement
or misappropriation by, or conflict with, any third party with respect to
such Proprietary Assets (including, without limitation, any demand or
request that GETS or Rivadalla license any rights from a third party).
(d) The conduct of GETS's business and the Proprietary
Assets have not infringed, misappropriated or conflicted with and does not
infringe, misappropriate or conflict with any intellectual property rights
of others, nor, would any future conduct infringe, misappropriate or
conflict with any Proprietary Assets of any third party.
(e) The Proprietary Assets have not been infringed,
misappropriated or conflicted by any third parties. Except as disclosed on
the attached Schedule 2.20(e), the transactions contemplated by this
Agreement and all other agreements contemplated by this Agreement shall have
no material adverse effect on GETS's right, title and interest in and to the
Proprietary Assets.
<PAGE>
(f) No employee or consultant of GETS is obligated
under any agreement (including licenses, covenants or commitments of any
nature) or subject to any judgment, decree or order of any court or
administrative agency, or any other restriction that would interfere with
the use of his or her efforts to carry out his or her duties for GETS or to
promote the interests of GETS or that would conflict with GETS's business as
presently conducted or as proposed to be conducted. The carrying on of
GETS's business by the employees and contractors of GETS and the conduct of
GETS's business as presently proposed will not, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such
employees or contractors or GETS is now obligated. GETS does not believe it
is or will be necessary to utilize any inventions of any employees of GETS
(or persons GETS currently intends to hire) made prior to their employment
by GETS, except for inventions, trade secrets or proprietary information
that has been assigned to GETS.
(g) Except as provided in Schedule 2.11(a), GETS and
Rivadalla have not granted and there are not outstanding, any options,
licenses or agreements of any kind relating to any of the Proprietary Assets
of GETS, nor is GETS bound by or a party to any option, license or agreement
of any kind with respect to any of its Proprietary Assets. GETS and
Rivadalla are not obligated to pay any royalties or other payments to third
parties with respect to the marketing, sale, distribution, manufacture,
license or use of any Proprietary Asset or any other property or rights.
2.21 Books and Records. The books, records and accounts of GETS and
GETS Affiliates (a) are in all material respects true and complete, (b) have
been maintained in accordance with reasonable business practices on a basis
consistent with prior years, (c) are stated in reasonable detail and
accurately and fairly reflect the transactions and disposition of the assets
of GETS in all material respects, and (d) accurately and fairly reflect in
all material respects the basis for the Financial Statements.
2.22 Compliance with Law and Charter Documents. Except where failure
would not have a material adverse effect on GETS and its operations, GETS
and GETS Affiliates are not in violation or default of any provision of
their Articles of Organization or Operating Agreement, both as amended, and
GETS and GETS Affiliates are in compliance with all applicable statutes,
laws, regulations and executive orders of the United States of America and
all states, foreign countries or other governmental bodies and agencies
having jurisdiction over GETS's and GETS Affiliates' business, properties or
assets. GETS and GETS Affiliates have not received any notice of any
violation of any such statute, law, regulation or order which has not been
remedies prior to the date hereof. The execution, delivery and performance
of this Agreement and all other agreements contemplated hereby to which GETS
or GETS Affiliates is a party, and the consummation of the transactions
contemplated hereby or thereby, will not result in any such violation or
default, or be in conflict with or result in a violation or breach of, with
or without the passage of time or the giving of notice or both, GETS's and
GETS Affiliates' Articles of Organization or Bylaws, any judgment, order or
decree of any court or arbitrator to which GETS and GETS Affiliates are a
party or is subject, any agreement or contract of GETS and GETS Affiliates,
or, a violation of any statute, law, regulation or order, or an event which
results in the creation of any lien, charge or encumbrance upon any asset of
GETS and GETS Affiliates.
<PAGE>
2.23 Environmental Matters.
(a) To the best of Rivadalla's knowledge, neither GETS
nor GETS Affiliates have been or is currently engaged in any activity
involving the possession, transport, disposal or release of any Hazardous
Materials. During the period that GETS and GETS Affiliates have leased the
premises currently occupied by them and those premises occupied by them
since the date of their incorporation, there have been no disposal, release
or threatened release of Hazardous Materials (as defined below) from or any
presence thereof on any such premises. There is no presence, disposal,
release or threatened release of Hazardous Materials on or from any of such
premises, which may have occurred prior to GETS having taken possession of
any of such premises. For purposes of this Agreement, the terms "disposal,"
"release," and "threatened release" have the definitions assigned thereto by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. S 9601 et seq., as amended ("CERCLA"). For the purposes of
this Section 2.23, "Hazardous Materials" mean any hazardous or toxic
substance, material or waste which is or becomes prior to the Initial
Closing Date or thereafter until all of the Options have been exercised or
expire regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic substance" or
"hazardous chemical" under (i) CERCLA; (ii) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. S 11001 et seq.; (iii) the Hazardous
Material Transportation Act, 49 U.S.C. S 1801, et seq.; (iv) the Toxic
Substances Control Act, 15 U.S.C. S 2601 et seq.; (v) the Occupational
Safety and Health Act of 1970, 29 U.S.C. S 651 et seq.; (vi) regulations
promulgated under any of the above statutes; or (vii) any applicable state
or local statute, ordinance, rule or regulation that has a scope or purpose
similar to those identified above.
(b) None of the premises currently leased by GETS or
any GETS Affiliate or any premises previously occupied by GETS is in
material violation of any federal, state or local law, ordinance, regulation
or order relating to industrial hygiene or to the environmental conditions
in such premises.
(c) During the time that GETS or any GETS Affiliate has
leased the premises currently occupied by it or any premises previously
occupied by GETS, neither GETS nor any third party, has used, generated,
manufactured or stored in such premises or transported to or from such
premises any Hazardous Materials.
(d) During the time that GETS or any GETS Affiliate has
leased the premises currently occupied by it or any premises previously
occupied by GETS, there has been no litigation, proceeding or administrative
action brought or threatened in writing against GETS by, or any settlement
reached by GETS with, any party or parties alleging the presence, disposal,
release or threatened release of any Hazardous Materials on, from or under
any of such premises.
(e) During the period that GETS or any GETS Affiliate
has leased the premises currently occupied by it or any premises previously
occupied by GETS, no Hazardous Materials have been transported from such
premises by or on behalf of GETS or any GETS Affiliate to any site or
facility now listed or proposed for listing on the National Priorities List,
at 40 C.F.R. Part 300, or any list with a similar scope or purpose published
by any state authority.
<PAGE>
2.24 Investment Banking and Finder Fees. Neither GETS, GETS
Affiliates, Rivadalla nor the Members have entered into any agreement which
would entitle any Person to any valid claim against GETS, GETS Affiliates,
the Members, or Pegasus for a broker's commission, finder's fee or similar
payment with respect to any matters contemplated by this Agreement.
2.25 Disclosure. The representations and warranties contained in this
Agreement and the schedules thereto delivered to Pegasus by GETS, Rivadalla
and the Members under this Agreement, taken together, do not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
2.26 Members' Representations Regarding Pegasus Stock. The Members
hereby represent and warrant to Pegasus that:
(a) The Members understand and acknowledge that the
Pegasus common stock, provided at the Initial Closing and Pegasus common
stock provided upon any subsequent exercise of an Option, will not be
registered under the Securities Act nor qualified under the securities law
of Texas or any other state or Governmental Entity, by virtue of exemptions
thereto. Each of the Members (either alone or in conjunction with his or her
professional advisers) has such experience and knowledge in investment,
financial and business matters in investments similar to the stock of the
Pegasus that they are capable of protecting their own interest in connection
therewith and qualifying for such exemptions. Further, the Members are
acquiring the Pegasus common stock and any Pegasus common stock obtained
through any subsequent exercise of an Option for investment purposes only
for Members' own account, and not on behalf of any other person nor with a
view to, or for resale in connection with any distribution thereof; and
(b) The Members have had access to pertinent SEC
filings of Pegasus and received and reviewed to their satisfaction such
documents and corporate and financial records of Pegasus, and have had
answered all questions with regard thereto that such Seller deemed necessary
or appropriate to evaluate the business, operations and assets of Pegasus
and the value of its common stock. The Members are relying solely on their
own evaluation and analysis in determining the value of the Pegasus common
stock and any Pegasus common stock obtained through any subsequent exercise
of an Option and not on any representation of value or worth made by
Pegasus.
2.27 Further Limitations on Disposition of Pegasus Common Stock.
Without in any way limiting the representations set forth in Section 2.26
above, Members further agree not to make any disposition of all or any
portion of the Pegasus common stock unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement;
(b) Such Member shall have notified Pegasus of the proposed
disposition, shall have furnished Pegasus with a statement of circumstances
surrounding the proposed disposition, and, at the expense of such Member or
its transferee, shall have furnished Pegasus with an opinion of counsel,
reasonably satisfactory to Pegasus, that such disposition will not require
registration of such securities under the Securities Act.
<PAGE>
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any Pegasus common stock in compliance with SEC Rule 144 or Rule
144A; or (ii) for any transfer of any Pegasus common stock by a Member that
is a partnership or a corporation to (A) a partner of such partnership or a
Member of such corporation, (B) a retired partner of such partnership who
retires after the date hereof, (C) the estate of any such partner or Member,
or (iii) for the transfer by gift, will or intestate succession by an
Investor to his or her spouse or lineal descendants or ancestors or any
trust for any of the foregoing; provided that in each of the foregoing cases
the transferee agrees in writing to be subject to the terms of Section 2.27
to the same extent as if the transferee were an original Member hereunder.
(c) It is understood that the certificates evidencing the Pegasus
common stock will bear the legends set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. WITHOUT LIMITING THE FOREGOING, NO OWNERSHIP,
INTERESTS OR RIGHTS WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY BE SOLD, TRANSFERRED OR CONVEYED FOR A PERIOD OF ONE
YEAR FROM THE DATE OF ISSUANCE.
The legend set forth above shall be removed by Pegasus from any certificate
evidencing Pegasus common stock upon deliver to Pegasus of an opinion by
counsel, reasonably satisfactory to Pegasus, that a registration statement
under the Securities Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that
such transfer will not jeopardize the exemption or exemptions from
registration pursuant to which Pegasus issued the Pegasus common stock.
(d) Notwithstanding the provisions of paragraphs (a), (b) and (c)
above, Pegasus acknowledges that the Members have disclosed to Pegasus the
intention of the Members to gift, sell, transfer or otherwise dispose of all
or part of the Pegasus shares, cash, or other securities and consideration
payable to the Members under this Agreement, and all proceeds thereof (the
"Pegasus Consideration"), subject to the restrictions on the Pegasus common
stock set forth in this Agreement, to one or more "Permitted Transferees",
which shall be defined as a member of holder's immediate family, trust for
the benefit of such immediate family members, and partnerships in which the
holder and such immediate family members are the only partners. A holder's
immediate family includes a spouse, children or more remote descendants
(including stepchildren and adopted children) and parents. Pegasus hereby
consents to the gift, sale, transfer or other disposition by the Members to
the Permitted Transferees of the Pegasus Consideration, subject to the
restrictions on the Pegasus common stock set forth in this Agreement as
permitted by applicable laws and regulations.
<PAGE>
ARTICLE 3
Representations and Warranties of Pegasus
Pegasus hereby represents and warrants to GETS and the Members as
follows:
3.1 Incorporation and Good Standing. Pegasus is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware. Pegasus is qualified to do business as a foreign
corporation in every jurisdiction in which the nature of its business or its
ownership of property requires it to be so qualified.
3.2 Authority. Pegasus has all necessary corporate power, authority
and capacity to enter into this Agreement, and all other agreements and
instruments to be executed by Pegasus as contemplated by this Agreement (the
"Pegasus Ancillary Agreements") and to carry out its obligations under this
Agreement and the Pegasus Ancillary Agreements. The execution and delivery
of this Agreement and the Pegasus Ancillary Agreements have been duly
authorized by all necessary corporate action on the part of Pegasus.
3.3 Enforceability of Obligations. This Agreement constitutes, and
each of the Pegasus Ancillary Agreements, when executed and delivered in
accordance with the terms thereof, will constitute, the legal, valid and
binding obligations of Pegasus, as the case may be, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
to rules of law governing specific performance, injunctive relief or other
equitable remedies.
3.4 No Conflict. Neither the execution and delivery of this Agreement,
the Pegasus Ancillary Agreements nor the consummation of the transactions
provided for hereby or thereby will conflict with, (a) the Certificate of
Incorporation or Bylaws of Pegasus, (b) result in any Lien upon any assets
of Pegasus, or (c) require any Consent of or with any Governmental Entity,
under the provisions of the Certificate of Incorporation or Bylaws of
Pegasus or any indenture, lease, contract or other material agreement,
instrument, permit, concession, franchise or license to which Pegasus or its
subsidiaries or any of their respective assets are bound or affected, or any
Laws, judgment or decree to which Pegasus or its subsidiaries are subject.
3.5 Investment Banking and Finder Fees. Pegasus has not entered into
any agreement which would entitle any Person to any valid claim against
GETS, the Members, or Pegasus for a broker's commission, finder's fee or
similar payment with respect to any matters contemplated by this Agreement.
3.6 Pegasus Common Stock.
(a) The shares of Pegasus common stock to be issued pursuant
to this Agreement have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been validly
issued and will be fully paid and non-assessable, and the issuance thereof
is not subject to any preemptive or other similar right.
<PAGE>
(b) The Pegasus common stock issued to the Members at the
Initial Closing or obtained through any subsequent exercise of an Option
will be unregistered and, except as permitted under Section 2.27(d), no
ownership, interest or rights in the stock may be sold, transferred or
conveyed by the Members for a period of one year from the date of issuance.
3.7 Disclosure. The representations and warranties contained in this
Agreement and the schedules thereto delivered to GETS and the Members by
Pegasus under this Agreement, taken together, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained herein and therein, in light of the
circumstances under which such statements were made, not misleading.
ARTICLE 4
Conduct of Business
GETS and Rivadalla hereby covenant and agree with Pegasus as follows:
4.1 Conduct of the Business. Except as expressly permitted or
contemplated by this Agreement, GETS and GETS Affiliates shall observe each
term set forth in this Section 4.1 and agrees that, from the date hereof
until the Initial Closing, and thereafter until any Option expires or all
Options are exercised as provided for in Section 1.2 of this Agreement,
unless otherwise consented to by Pegasus in writing within a reasonable
period of time:
(a) The business of GETS and GETS Affiliates shall be
conducted only in, and GETS and GETS Affiliates shall not take any action
except in, the ordinary course of GETS's business, on an arm's-length basis,
in the best interest of GETS, GETS Affiliates and the Members and in
accordance in all material respects with all applicable laws, rules and
regulations and consistent with the past practice of GETS;
(b) GETS and GETS Affiliates shall not, directly or
indirectly, do or permit to occur any of the following: (i) issue, convey,
sell or otherwise dispose of any interest in GETS; (ii) sell, pledge,
dispose of or encumber any ownership or other interest in GETS (iii) sell,
pledge, dispose of or encumber any of its assets (or enter into factoring or
similar arrangements), except in the ordinary course of business and except
as identified to Pegasus in writing; (iv) amend or propose to amend its
Articles of Organization or Operating Agreement; (v) acquire (by merger,
exchange, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership, joint venture or other business organization or
division or material assets thereof; (vi) enter into any new or modify any
existing lease of real property; (vii) incur any indebtedness for borrowed
money involving an increase in liabilities of more than $50,000 or issue any
debt securities; (viii) voluntarily permit any accounts payable owed to
trade creditors to remain outstanding more than 90 days; (ix) accelerate,
beyond the normal collection cycle, collection of accounts receivable except
in the ordinary course of business consistent with past practice; or (x)
enter into or propose to enter into, or modify or propose to modify, any
agreement, arrangement or understanding with respect to any of the matters
set forth in this Section 4.1(b);
(c) In the event that GETS shall make a distribution of
profits, GETS shall pay to Pegasus a pro-rata portion of the distribution or
dividend based upon Pegasus' then-existing percentage of ownership of GETS;
<PAGE>
(d) GETS and GETS Affiliates shall not, directly or
indirectly, enter into or modify any employment, severance or similar
agreements or arrangements or take any action with respect to the grant of
any bonuses, salary increases, stock options, severance or termination pay
except in the ordinary course of business consistent with past practices
without Pegasus' prior written approval after the Initial Closing Date;
(e) GETS will maintain employee incentive plans for key
management and personnel as identified on Schedule 4.1(e) in a form approved
by Pegasus in writing, provided that no employee incentive plan created or
maintained by GETS shall convey ownership of GETS stock or an interest in
GETS to any employee;
(f) GETS shall not adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation or
employment plan;
(g) GETS and GETS Affiliates shall not adopt or amend any
employee benefit plan, trust, fund or group arrangement for the benefit or
welfare of any employees, except for amendments made in the ordinary course
of business and that do not result in any increase in the cost to GETS as a
result of such amendment;
(h) GETS and GETS Affiliates shall not cancel or terminate
their current insurance policies or cause any of the coverage thereunder to
lapse, unless simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for substantially
similar premiums are in full force and effect;
(i) GETS and GETS Affiliates shall (i) use commercially
reasonable efforts to preserve intact GETS's and GETS Affiliates' business
organization and goodwill, keep available the services of GETS's and GETS
Affiliates' officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with GETS and GETS Affiliates; (ii) confer on a
regular and frequent basis with representatives of Pegasus to report
operational matters and the general status of ongoing operations; and (iii)
not intentionally take any action which would render, or which reasonably
may be expected to render, any representation or warranty made by it in this
Agreement;
(j) GETS and GETS Affiliates shall not (i) change any of its
methods of accounting in effect at December 31, 1999, other than those
required by GAAP; (ii) make or rescind any express or deemed election
relating to Taxes, (iii) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes; or (iv) change any of its methods of reporting income or
deductions for federal income Tax purposes from those employed in the
preparation of the federal income Tax returns for the taxable year ending
December 31, 1999;
(k) GETS and GETS Affiliates shall not engage any
professional consultants including, but not limited to, accountants,
auditors, attorneys, tax preparers or other professional consultants, except
in the ordinary course of business consistent with past practices, without
Pegasus' prior written approval;
<PAGE>
(l) Following the execution of Exhibit 6.2(d), GETS shall
not amend its Operating Agreement to change the number of Managers and shall
allow Pegasus to appoint and maintain two (2) Managers for GETS, provided
however that in the event Pegasus fails to exercise any Option or this
Agreement is terminated, the Managers appointed by Pegasus shall be removed
automatically and the remaining GETS Managers may amend the Operating
Agreement in their sole discretion; and
(m) Until the exercise of the Second Option or termination
of this Agreement, Rivadalla agrees to cover any losses from the operations
of GETS on an annual basis and pay an amount equal to such shortfall to
GETS.
4.2 Access to Books and Records. Between the date hereof and the
Initial Closing Date, and thereafter until all Options expire or are
exercised as provided for in Section 1.2 of this Agreement, GETS and the
Members shall (a) afford Pegasus and their authorized representatives (the
"Pegasus Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books, records, officers,
employees and other items of GETS and the Members, (b) shall cause its
independent accountants to afford to the independent auditors of Pegasus
reasonable access to the audit work papers and other records of the
independent auditors of GETS, GETS Affiliates and the Members, and (c)
otherwise provide such assistance as is reasonably requested by Pegasus in
order that Pegasus may have a full opportunity to make such investigation
and evaluation as it shall reasonably desire to make of the business and
affairs of GETS and the Members. In addition, GETS and its officers and
directors and the Members shall cooperate fully (including providing
introductions, where necessary) with Pegasus to enable Pegasus to contact
such third parties, including customers, prospective customers, vendors, or
suppliers of GETS as Pegasus deems reasonably necessary to complete its due
diligence; provided that, Pegasus agree not to initiate such contacts
without the prior approval of GETS, which approval will not be unreasonably
withheld; provided further, that a representative of GETS may, at GETS's
option, participate in such contacts. Pegasus will hold, and will use all
reasonable efforts to cause its officers, employees, accountants, counsel,
financial advisors and all other representatives and affiliates to hold, any
nonpublic information in confidence to the extent required by, and in
accordance with, and will comply with the confidentiality provisions of this
Agreement.
ARTICLE 5
Additional Agreements and Covenants
5.1 GETS's Manager and Membership Interests. Beginning on the date of
full execution hereof and thereafter until all Options expire or are
exercised as provided for in Section 1.2 of this Agreement, GETS's Managers
shall include two (2) Pegasus representatives as provided by Exhibit 6.2(d)
and no GETS ownership interest shall be granted or transferred to any Person
except as provided for in this Agreement. Pegasus shall have all of the
rights of a member as set forth in the GETS Operating Agreement.
5.2 Software Development Agreement. Simultaneously with the execution
of this Agreement, GETS and Pegasus will enter into a Software Development
Agreement in the form attached hereto as Exhibit 1.4.2.
<PAGE>
5.3 Consents. Pegasus, GETS, Rivadalla and the Members shall use all
reasonable efforts to obtain the Consent of, or effect the notification of
or filing with, each Person necessary for such party hereto to consummate
the transactions contemplated by this Agreement.
5.4 Intellectual Property Rights of the Members. Prior to the Initial
Closing, GETS Affiliates, the Members and Rivadalla shall transfer, assign
and convey all intellectual property rights that they may have in the
Software or Proprietary Assets of GETS to GETS in the form attached as
Exhibit 5.4.
5.5 Restrictions on Negotiations with Third Parties.
(a) From and after the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement in
accordance with its terms or the failure by Pegasus to exercise any Option
within the time permitted herein, Rivadalla GETS and the Members shall not,
directly or indirectly, through any officer, director, employee,
representative or agent of GETS or the Members or any of their respective
subsidiaries, solicit or encourage (including by way of furnishing nonpublic
information) or take other action, either directly or indirectly, to
facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to an Acquisition Proposal (as defined
below) from any person, or engage in any discussions or negotiations
relating thereto (other than with Pegasus) or in furtherance thereof or
accept any Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any inquiries or proposals regarding any (i)
merger, consolidation, sale of substantial assets or similar transactions
involving GETS or any GETS Affiliates (other than sales of assets or
inventory in the ordinary course of business), (ii) purchase any ownership
interest in GETS (including without limitation by way of a tender offer or
an exchange offer) or similar transactions involving GETS or any GETS
Affiliates, (iii) acquisition by any Person or "Group" (as defined under
Section 13(d) of the Securities Exchange Act of 1934 (the "Securities Act")
and the rules and regulations thereunder) of beneficial ownership or a right
to acquire any beneficial ownership of GETS; or (iv) public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) If GETS or any of its subsidiaries receives any
unsolicited offer or proposal to enter negotiations relating to an
Acquisition Proposal, GETS shall immediately notify Pegasus thereof,
including information as to the identity of the offeror or the party making
any such offer or proposal and the principal financial terms and conditions
of such offer or proposal, as the case may be.
<PAGE>
5.6 Notice of Certain Matters. GETS, Rivadalla and the Members shall
promptly notify Pegasus, and Pegasus shall promptly notify GETS and the
Members, in writing (i) of any material governmental or administrative
complaints, investigations or hearings (or communications indicating that
the same may be contemplated); (ii) if such Person discovers that any
representation or warranty made by it in this Agreement was when made, or
has subsequently become, untrue in any respect; (iii) of any notice or other
communication from any third party relating to, a material default or event
which, with notice or lapse of time or both, would become a material
default, received by such Person subsequent to the date of this Agreement
and prior to the Initial Closing Date under any material agreement,
indenture or instrument to which such Person is a party or to which the
assets of such Person and its subsidiaries are subject, or (iv) any notice
or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
5.7 Confidential Information.
(a) Pegasus, GETS and the Members have disclosed and delivered
and will through the Initial Closing, and thereafter until all Options
expire or are exercised as provided for in Section 1.2 of this Agreement,
disclose and deliver to the other party hereto certain information about its
respective properties, employees, finances, businesses and operations
prepared by such party or its advisors (such party when disclosing such
information being "Disclosing Party" and such party when receiving such
information being the "Receiving Party"). All such information furnished by
the Disclosing Party or its Authorized Persons (as defined below), whether
furnished before or after the date hereof, whether oral or written, and
regardless of the manner in which it is furnished, is referred to in this
Agreement as "Confidential Information." Confidential Information does not
include, however, information which (i) is or becomes generally available to
the public other than as a result of a disclosure by the Receiving Party or
its Authorized Persons, (ii) was available to the Receiving Party on a
nonconfidential basis prior to its disclosure by the Disclosing Party or its
Authorized Persons, provided that the source of such information is not
known to the Receiving Party to be obligated to maintain such information as
confidential, (iii) becomes available to the Receiving Party on a
nonconfidential basis from a Person other than the Disclosing Party or its
Authorized Persons that is not otherwise bound by a confidentiality
agreement with the Disclosing Party or any of its Authorized Persons, or is
otherwise not under an obligation to the Disclosing Party or any of its
Authorized Persons not to transmit the information to the Receiving Party or
any other third party or (iv) required to be disclosed in connection with
this Agreement or any other documents contemplated hereby. As used in this
Agreement, the term "Authorized Persons" means, as to any Person, those
Persons that are actively and directly participating in the evaluation and
negotiation of the transaction contemplated by this Agreement.
<PAGE>
(b) Subject to Section 5.8(c), unless otherwise agreed to in
writing by the Disclosing Party, the Receiving Party agrees (a) except as
required by law, to keep all Confidential Information confidential and not
to disclose or reveal any Confidential Information to any person other than
its Authorized Persons, and to cause those persons to observe the terms of
this Agreement, (b) not to use Confidential Information for any purpose
other than in connection with its evaluation of the transaction contemplated
hereby or the completion of the transaction contemplated hereby in a manner
approved by the Disclosing Party and (c) except as required by law, not to
disclose to any Person (other than its Authorized Persons) (i) the fact that
the Confidential Information exists or has been made available, (ii) any
information about the transactions contemplated hereby, or the terms or
conditions or any facts relating thereto, including without limitation, the
fact that discussions are taking place with respect thereto or the status
thereof, or (iii) the fact that Confidential Information has been made
available to the Receiving Party or its Authorized Persons. The Receiving
Party will be responsible for any breach of the terms of this Section 5.8 by
the Receiving Party or any of its Authorized Persons.
(c) In the event that the Receiving Party is requested pursuant
to, or required by, applicable law, regulation or by legal process to
disclose any Confidential Information or any other information concerning
the Disclosing Party or the Proposed Transaction, the Receiving Party agrees
that it will provide the Disclosing Party with prompt notice of such request
or requirement in order to enable the Disclosing Party to seek an
appropriate protective order or other remedy, to consult with the Receiving
Party with respect to the Disclosing Party taking steps to resist or narrow
the scope of such request or legal process, or to waive compliance, in whole
or in part, with the terms of this Agreement. In the event that no such
protective order or other remedy is obtained, or that the Disclosing Party
waives compliance with the terms of this Agreement, the Receiving Party will
use its reasonable best efforts to disclose only that portion of any
Confidential Information which the Receiving Party is advised by counsel is
legally required and will exercise all reasonable efforts to ensure that all
Confidential Information so disclosed will be accorded confidential
treatment.
(d) Pegasus, GETS and the Members are aware, and Pegasus, GETS
and the Members will advise their respective Authorized Persons that are
informed of the matters that are the subject of this Agreement, of the
restrictions imposed by the United States securities laws on the purchase or
sale of securities by any Person who has received material, nonpublic
information from the issuer of such securities and on the communication of
such information to any other person when it is reasonably foreseeable that
such other Person is likely to sell such securities in reliance upon such
information.
(e) Without prejudice to the rights or remedies otherwise
available to each of the parties hereto, each such party shall be entitled
to equitable relief by way of specific performance, injunction or otherwise,
if the other party hereto or any of its Authorized Persons breaches or
threatens to breach any of the provisions of this Section 5.8. Each party
hereto agrees to waive any requirement for the security or posting of any
bond in connection with such remedy.
<PAGE>
ARTICLE 6
Conditions to Initial Closing and Subsequent Closings
6.1 Conditions to Each Party's Obligation To Effect the Transaction.
The respective obligation of each party to effect the transactions
contemplated herein is subject to the satisfaction prior to the Initial
Closing Date and Subsequent Closings of the following conditions:
(a) Hart Scott Rodino Act. Approval of the
transactions contemplated herein may be required under the Hart Scott Rodino
Act ("HSR Act"). To the extent HSR Act approval is required prior to the
exercise of any Option, the time periods set forth in Sections 1.2 and 1.5
shall be extended as necessary, any waiting period applicable to the
consummation of the transactions contemplated herein under the HSR Act shall
have expired or been terminated and no action shall have been instituted by
the Department of Justice or Federal Trade Commission challenging or seeking
to enjoin the transactions contemplated herein, which action shall not have
been withdrawn or terminated.
(b) Board of Director and Member Approval. This
Agreement shall have been approved and adopted by the Parties' respective
Boards of Directors and Members.
(c) Governmental Entity Approvals. All authorizations,
consents, orders or approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the transactions contemplated by this Agreement
shall have been filed, expired or been obtained, other than those that,
individually or in the aggregate, the failure to be filed, expired or
obtained would not, in the reasonable opinion of the Parties, have a
material effect on GETS or Pegasus.
(d) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint
or prohibition (an "Injunction") preventing the consummation of the
transactions contemplated by this Agreement shall be in effect, nor shall
any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order (whether temporary, preliminary or
permanent) enacted, entered or enforced which makes the consummation of the
transactions contemplated by this Agreement illegal or prevents or prohibits
the transactions contemplated by this Agreement.
6.2 Conditions to Pegasus' Obligations. The obligations of Pegasus to
consummate the transactions contemplated by this Agreement are subject to
the fulfillment and satisfaction as of the Initial Closing Date, and
thereafter until all Options expire or are exercised as provided for in
Section 1.2 of this Agreement as is applicable, of each of the following
conditions, any of which may be waived in writing, in whole or in part, by
Pegasus:
<PAGE>
(a) Representations and Warranties. The representations and
warranties of GETS, Rivadalla and the Members set forth in this Agreement
shall be true and correct in all material respects (i) as of the date
hereof, (ii) as of the Initial Closing Date, as though made on and as of the
Initial Closing Date and (iii) as of the date of the exercise by Pegasus of
each of the Options; and Pegasus shall have received a certificate signed by
the chief executive officer and the chief financial officer of GETS and a
duly authorized officer of each of the Members to such effect.
(b) Performance of Obligations of Rivadalla, GETS and the
Members. Rivadalla, GETS and the Members shall have performed in all
material respects all obligations and covenants required to be performed by
them under this Agreement prior to or as of the Initial Closing Date and as
of the date of the exercise by Pegasus of each of the Options, and Pegasus
shall have received a certificate signed by the chief executive officer and
the chief financial officer of GETS and a duly authorized officer of each of
the Members to such effect.
(c) Actions to be Taken by Rivadalla, GETS and the Members. All
actions to be taken by Rivadalla, GETS and the Members in connection with
the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, agreements, and other documents
required to effect the transactions contemplated hereby will be delivered to
and reasonably satisfactory in form and substance to Pegasus.
(d) Amendment to GETS Articles of Organization and Operating
Agreement. GETS shall have taken all actions necessary and required to
amend its Operating Agreement and Articles of Organization in the form
attached as Exhibit 6.2(d).
(e) Dissolution of Lodging Touch Systems International
Corporation. GETS shall have taken all action necessary and required to
dissolve Lodging Touch Systems International Corporation as a California
corporation prior to the exercise of the Second Option and have it withdrawn
from doing business in Arizona.
(f) Legal Opinion. Pegasus shall have received a legal opinion
in a form acceptable to Pegasus from Watland, Allen & Lasee, PLLC, counsel
to GETS, attached as Exhibit 6.2(f).
(g) GETS Financials. GETS shall have provided Pegasus with
copies of the financial statements identified in Section 2.7 hereof.
(h) Consents. GETS shall have delivered to Pegasus the necessary
assignment and assumption agreements from EHS to GETS in the form attached
as Exhibit 6.2(h).
(i) Material Adverse Change. No material adverse change shall
have occurred with respect to GETS or the Members.
(j) Employment Agreements. At or prior to the Initial Closing,
GETS shall enter into Employment Agreements acceptable to Pegasus in the
form attached as Exhibit 6.2(j) with Christian Rivadalla, Elizabeth
Rivadalla, Ken Taylor, Mike DiModugno, Ric Patrick, Mark Harris and the CTO
position (the "Employment Agreements").
<PAGE>
(k) Other Matters. Such other certificates, documents and
instruments as Pegasus reasonably request related to the transactions
contemplated hereby.
6.3 Conditions to GETS's and the Members' Obligations. The obligations
of GETS and the Members to consummate the transactions contemplated by this
Agreement are subject to the fulfillment and satisfaction as of the Initial
Closing Date, and thereafter until all Options are exercised as provided for
in Section 1.2 of this Agreement as is applicable, of each of the following
conditions, any of which may be waived in writing, in whole or in part, by
GETS and the Members.
(a) Representations and Warranties. The representations and
warranties of Pegasus set forth in this Agreement shall be true and correct
in all material respects (i) as of the date hereof, (ii) as of the Initial
Closing Date, as though made on and as of the Initial Closing Date and (iii)
as of the date of the exercise by Pegasus of each of the Options.
(b) Performance of Obligations of Pegasus. Pegasus shall have
performed in all material respects all obligations and covenants required to
be performed by it under this Agreement prior to or as of the Initial
Closing Date and as of the date of the exercise by Pegasus of each of the
Options.
(c) Actions to be Taken by Pegasus. All actions to be taken by
Pegasus in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, agreements, and other
documents required to effect the transactions contemplated hereby will be
delivered to and be reasonably satisfactory in form and substance to GETS
and the Members.
(d) Other Matters. Such other certificates, documents and
instruments as GETS and the Members reasonably request related to the
transactions contemplated hereby.
ARTICLE 7
Post-Closing Covenants
The Parties agree as follows with respect to the period following the
Initial Closing:
7.1 General. In case at any time after the Initial Closing any
further action is necessary to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution
and delivery of such further instruments and documents) as the other Party
reasonably may request, at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefore under
Article 8).
<PAGE>
7.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (a) any transaction contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Initial Closing Date or prior to the exercise or expiration of
the Options (including any such action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand arising after the Initial
Closing Date or prior to the exercise or expiration of the Options
concerning matters taking place prior to the Initial Closing Date or prior
to the exercise or expiration of the Options), the other Party, at the
expense of the first Party, will cooperate with the contesting or defending
Party and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefore under
Article 8).
7.3 Covenant Not to Compete. Recognizing GETS's, the Members' and
Rivadalla's operation of GETS and its familiarity with the trade secrets,
customer lists, business methods and confidential information, and as a
material inducement to Pegasus to enter into this Agreement, GETS, the
Members and Rivadalla make the following agreements: The parties
acknowledge that the covenants under this Section are dependent upon
performance by Pegasus of its obligations under this Agreement.
(a) Other than as set forth in this Agreement, for a period of
five (5) years from and after the Initial Closing Date and the exercise of
the Second Option, GETS, GETS Affiliates or the Members will not directly or
indirectly own any interest in, manage, control, participate in (whether as
partner, agent, representative or otherwise), consult with, render services
for, or in any other manner engage in any property management system or
application service provider business within the hospitality industry
without the prior written approval of Pegasus; provided that Section 7.3(a)
will expire in the event that Pegasus elects not to exercise any Option; and
(ii) GETS and the Members acknowledge that GETS's business has been
conducted on an international scale, and that the geographic restrictions
set forth above are reasonable and necessary to protect the interests of
Pegasus pursuant to this Agreement.
(b) Other than as set forth in this Agreement, for a period of
five (5) years from and after the Initial Closing Date and the exercise of
the Second Option, GETS, GETS Affiliates or the Members will not directly or
indirectly (a) induce or attempt to induce any employee of GETS or Pegasus
to leave their employ, or in any way interfere with the relationship between
GETS or Pegasus and any employee thereof, or (b) call on, solicit or service
any customer, supplier, licensee, licensor or other business relation of
GETS or Pegasus in order to induce or attempt to induce such Person to cease
doing business with GETS or Pegasus, or in any way interfere with the
relationship between any customer, supplier, licensee or business relation
and GETS or Pegasus, provided that this paragraph will expire if Pegasus
fails to exercise any Option.
<PAGE>
7.4 Assignment of Membership Interests Acquired by Pegasus.
(a) During the term of this Agreement, Pegasus shall
not transfer, assign , sell or otherwise convey its Initial Membership
Interest and/or the membership interest purchased upon the exercise of the
First Option, if any, except as expressly provided in Section 7.4(b) below
or for a conveyance of such interests, in whole or in part, to (i) an entity
resulting from a merger, acquisition or other business combination involving
Pegasus or (ii) an entity that acquires all or substantially all of Pegasus'
assets.
(b) During the term of this Agreement or in the event
this Agreement is terminated, Pegasus shall have the right to transfer,
assign, sell or otherwise convey its Initial Membership Interest and the
membership interest purchased upon the exercise of the First Option, if any,
in whole or in part to (i) a third party unrelated to Pegasus, (ii) an
entity in which Pegasus has an interest or a Pegasus affiliate, or (iii) a
person or entity that agrees in writing to be bound by all of the terms of
this Agreement; provided that, in the event Pegasus intends to transfer,
assign, sell or otherwise convey such interest as provided in (i) through
(iii) above, Pegasus shall provide Christian Rivadalla in his capacity as
Member Representative with written notice of its intent to transfer, assign,
sell or otherwise convey such interest and the identity of the one or more
proposed parties and Christian Rivadalla in his capacity as Member
Representative will have thirty (30) days from receipt of each such notice
to make a written offer and complete the purchase of the interest from
Pegasus on mutually agreed terms. Pegasus may accept or reject any offer
made by Christian Rivadalla in his capacity as Member Representative in its
sole discretion. In the event Christian Rivadalla in his capacity as Member
Representative does not purchase such interest within thirty (30) days of
receipt of notice of intent to sell from Pegasus, Pegasus shall have the
right to freely transfer, assign, sell or otherwise convey such interest to
any third party.
(c) To the extent that the terms of this Section 7.4
contradict the terms of the GETS Operating Agreement then in place, then
this Section shall control any transactions contemplated herein and no
further action or approval will be required by the then-existing members of
GETS.
7.5 Consents. Pegasus shall receive duly executed copies in form and
substance reasonably satisfactory to Pegasus of the consents in the form
attached as Exhibit 7.5, including the consents to assign all necessary
agreements from EHS to GETS and the consent necessary to approve the
acquisition of GETS by Pegasus, if any, as specified in Schedule 2.11(d).
<PAGE>
ARTICLE 8
Indemnification
8.1 Indemnification Provisions for Benefit of Pegasus. Subject to the
terms of Section 8.3, in the event GETS, the Members or Rivadalla breaches
any of its representations, warranties, and covenants contained in this
Agreement, or if any claim is made by a third party, and, if there is an
applicable survival period pursuant to Section 10.1, then GETS and the
Members agree to indemnify Pegasus from and against the entirety of any
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses, Pegasus
shall suffer through and after the date of the claim for indemnification
caused by such claim.
8.2 Indemnification Provisions for Benefit of GETS and the Members.
Subject to the terms of Section 8.3, in the event Pegasus breaches any of
its representations, warranties, and covenants contained in this Agreement,
or if any claim is made by a third party (including without limitation a
customer of Pegasus alleging damages arising after the Initial Closing Date
or before the exercise or expiration of the Options), and, if there is an
applicable survival period pursuant to Section 10.1, then Pegasus agrees to
indemnify GETS and the Members from and against the entirety of any actions,
suits, proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs
and reasonable attorneys' fees and expenses, GETS and the Members shall
suffer through and after the date of the claim for indemnification caused by
such claim including reasonable attorneys' fees and out-of-pocket expenses.
8.3 Procedure for Matters Involving Third Parties.
(a) The party from whom indemnification is sought is
referred to as the "Indemnifying Party", and the Party who is seeking
indemnification under this Article is referred to as the "Indemnified
Party". If any third party shall notify any Indemnified Party with respect
to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the Indemnifying Party under this Article 8, then
the Indemnified Party shall promptly issue a Claim Notice to the
Indemnifying Party with respect thereto.
(b) Any Indemnifying Party will have the right at any time
to assume thereafter conduct the defense of the Third Party Claim with
counsel of the Indemnifying Party's choice reasonably satisfactory to the
Indemnified Party, and at the Indemnifying Party's sole cost and expense;
provided, however, the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not to be
withheld unreasonably).
<PAGE>
(c) Unless and until an Indemnifying Party assumes the
defense of the Third Party Claim as provided in Section 8.3(b), the
Indemnified Party may defend against the Third Party Claim in any manner the
Indemnifying Party reasonably may deem appropriate.
(d) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not
to be unreasonably withheld).
8.4 Notice of Claim. A Party suffering consequences that gives or
could give rise to a claim for indemnification under this Article 8 shall
promptly notify each other Party thereof in writing (a "Claim Notice") in
accordance with Section 10.3. The Claim Notice shall contain a brief
description of the nature of the claim and, if practicable, an aggregate
dollar value estimate of the claim. No delay in the issuance of a Claim
Notice shall relieve any Party from any obligation under this Article 8,
unless and solely to the extent such Party is thereby prejudiced.
8.5 Exclusive Remedy. Pegasus, GETS and the Members acknowledge and
agree that the foregoing indemnification provisions in this Article 8 shall
be the exclusive remedy of Pegasus, GETS and the Members with respect to the
transactions contemplated hereby, but not with respect to any alleged
violations of this Agreement as it relates to Section 5.9 [Confidential
Information] and Section 7.3 [Covenant Not To Compete].
ARTICLE 9
Termination
9.1 Termination. The Parties may terminate this Agreement as provided
below:
(a) by mutual written consent at any time prior to the Initial
Closing Date and/or prior to the exercise of all of the Options by Pegasus;
or
(b) if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall (i) have issued an
order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, which order, decree or ruling
is final and nonappealable, or (ii) seek to enjoin the transactions
contemplated by this Agreement; or
(c) by Pegasus, upon a breach of any representation, warranty,
covenant or agreement on the part of GETS or the Members set forth in this
Agreement, or if any representation or warranty of GETS or the Members shall
have become untrue; in either case such that the conditions set forth in
Section 6.2(a) would not be satisfied as of the time of such breach or as of
the time such representation or warranty shall have become untrue provided
that in any event GETS or the Members shall have 10 business days following
notice to cure such breach or inaccuracy;
<PAGE>
(d) by GETS or the Members, upon a breach of any representation,
warranty, covenant or agreement on the part of Pegasus set forth in this
Agreement, or if any representation or warranty of Pegasus shall have become
untrue; in either case such that the conditions set forth in Section 6.3(a)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue provided that in any
event Pegasus shall have 3 business days following notice to cure such
breach or inaccuracy; or
(e) Subject to Section 9.2 below, this Agreement shall
automatically terminate upon the failure of Pegasus to exercise any Option.
9.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement shall be of no further
force or effect, except (i) as set forth in this Section 9.2, Section 5.8,
Section 9.3 and Article 10, each of which shall survive the termination of
this Agreement, and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.
9.3 Fees and Expenses. In the event of the termination of this
Agreement, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the transaction is consummated.
9.4 Prompt Notice. In the event of termination of this Agreement by
any party as provided in Article 9, prompt written notice shall be given to
the other parties thereto.
ARTICLE 10
General Provisions
10.1 Survival of Representations, Warranties and Covenants. Unless
otherwise provided herein, all representations and warranties of the Parties
in this Agreement shall survive the Initial Closing and any Subsequent
Closing and the consummation of the transactions contemplated hereby, and
shall terminate upon the statute of limitations applicable to matters
related to such representations and warranties and continue in full force
and effect for the period of such statute of limitations. All covenants
contained in this Agreement shall survive the Initial Closing and the
exercise or expiration of all of the Options, except for the covenants
contained in Section 5.9 [Confidential Information], Section 7.3 [Covenant
Not to Compete], Section 9.3 [Fees and Expenses], and Article 10 (other than
Section 10.2 [Press Releases and Announcements]), each of which shall
survive the Initial Closing, any Subsequent Closing and the consummation of
the transactions contemplated hereby.
10.2 Press Releases and Announcements. Pegasus shall have the sole and
exclusive right to make and distribute any press release or public
announcement required to be made with respect to the transactions
contemplated herein in its sole discretion. GETS shall not make any
announcement or release regarding this transaction without the prior written
consent of Pegasus.
<PAGE>
10.3 Notices. All notices, demands and other communications to be
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been delivered upon receipt when
delivered personally or by overnight courier or three (3) business days
after being mailed, if mailed by first class mail, return receipt requested,
or when receipt is acknowledged, if sent by facsimile, telecopy or other
electronic transmission device. Notices, demands and communications to the
Parties hereto will, unless another address is specified in writing, be sent
to the address indicated below:
Notices to Pegasus:
PEGASUS SOLUTIONS, INC.
3811 Turtle Creek Drive, Suite 1100
Dallas, Texas 75219
Attention: Ric L. Floyd, Esq.
Facsimile: (214) 528-5675
Notices to GETS:
GETS, LLC
1380 West Auto Drive
Tempe, Arizona 85284
Attention: Christian Rivadalla
Facsimile: (480) 831-1108
Notices to EHS:
ENTERPRISE HOSPITALITY SOLUTIONS, INC.
1380 West Auto Drive
Tempe, Arizona 85284
Attention: Christian Rivadalla
Facsimile: (480) 831-1108
Notices to Christian Rivadalla:
CHRISTIAN RIVADALLA
13050 E. Turquoise Avenue
Scottsdale, AZ 85259
Facsimile: (480) 614-3881
Notices to Rivadalla Family Trust:
RIVADALLA FAMILY TRUST
13050 E. Turquoise Avenue
Scottsdale, AZ 85259
Attention: Christian Rivadalla
Facsimile: (480) 614-3881
<PAGE>
10.4 Arbitration. The parties agree that any controversy, claim or
dispute arising under this Agreement shall, at the request of any of the
Parties be resolved by a private arbitration proceeding conducted pursuant
to the Rules of Commercial Arbitration of the American Arbitration
Association (the "AAA"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There
shall be a panel of three arbitrators. Pegasus shall select one arbitrator
and GETS and the Members shall select one arbitrator. The arbitrators
selected by the Parties shall select a third neutral arbitrator. All
reasonable and necessary costs and fees (including attorneys' fees) incurred
in connection with the arbitration shall be borne by the losing party or
assessed as an award as otherwise deemed appropriate by the arbitrators. The
arbitrators shall set a hearing date for an arbitration proceeding (the
"Hearing") in accordance with the Rules of Commercial Arbitration of the
AAA, unless otherwise agreed by the parties, or unless otherwise ordered by
the Arbitrator at the request of any party. The Hearing shall be conducted
and completed on consecutive business days. The Hearing shall be held in
Dallas, Texas.
10.5 Waiver; Amendment. A waiver of any default, breach or non-
compliance under this Agreement is not effective unless in writing and
signed by the party to be bound by the waiver. No waiver shall be inferred
from or implied by any failure to act or delay in acting by a party in
respect of any default, breach or non-observance or by anything done or
omitted to be done by the other party. The waiver by a party of any
default, breach or non-compliance under this Agreement shall not operate as
a waiver of that party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance (whether of the
same or any other nature). No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all of the parties
hereto. No course of dealing between or among any Persons having any
interest in this Agreement will be deemed effective to modify or amend any
part of this Agreement or any rights or obligations of any Person under or
by reason of this Agreement.
10.6 Assignment. This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned or conveyed by operation of law or otherwise by any party hereto
without the prior written consent of the other parties hereto.
10.7 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
10.8 Time of Essence. Time shall be of the essence of this Agreement
in all respects.
10.9 Entire Agreement. This Agreement, the schedules hereto, the
Company Ancillary Agreements and the Pegasus Ancillary Agreements and the
exhibits thereto and other documents referred to herein contain the complete
agreement between the parties and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written.
<PAGE>
10.10 Interpretation. When a reference is made in this Agreement
to an Article, Section or Schedule, such reference shall be to an Article,
Section or Schedule of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation". All accounting terms not defined in this Agreement
shall have the meanings determined by generally accepted accounting
principles.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and
the same instrument.
10.12 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ALL REMEDIES AT LAW, IN
EQUITY, BY STATUTE OR OTHERWISE SHALL BE CUMULATIVE AND MAY BE ENFORCED
CONCURRENTLY OR FROM TIME TO TIME AND, SUBJECT TO THE EXPRESS TERMS OF THIS
AGREEMENT, THE ELECTION OF ANY REMEDY OR REMEDIES SHALL NOT CONSTITUTE A
WAIVER OF THE RIGHT TO PURSUE ANY OTHER AVAILABLE REMEDIES.
[Signature pages follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized representative as of the date
first written above.
PURCHASER: SELLER:
Pegasus Solutions, Inc. GETS, LLC
By: /s/ JOHN F. DAVIS, III By: /s/ C. RIVDALLA
------------------------------ ------------------------------
Title: President and CEO Title: Manager
------------------------------ ------------------------------
MEMBERS: CHRISTIAN RIVADALLA, Individually
Enterprise Hospitality Solutions, Inc. /s/ C. RIVADALLA
------------------------------
/s/ C. RIVADALLA
----------------------
Rivadalla Family Trust
By: /s/ C. RIVADALLA
-------------------------
Name: Christian Rivadalla
Title: Co-Trustee
<PAGE>
SCHEDULE 2.1
List of all names used by GETS or any Predecessor of GETS or GETS Affiliates
during the past 5 years
Christian Rivadalla, dba Enterprise Hospitality Solutions, an Arizona sole
proprietorship
Enterprise Hospitality Solutions, Inc., an Arizona S corporation
Lodging Touch Systems International, Inc., a California C corporation
Global Enterprise Solutions, LLC, an Arizona limited liability company
SCHEDULE 2.2
List of all GETS Affiliates
Enterprise Hospitality Solutions, Inc., an Arizona S corporation
SCHEDULE 2.4
Conflicts of GETS to the execution and delivery of the Agreement or GETS
Ancillary Agreements
Enterprise Hospitality Solutions/Best Western International Property
Management Services Outsourcing Agreement, October 12, 1999 - This agreement
is not assignable by EHS to GETS without the written consent of Best Western
Software License Agreement and Maintenance Agreement between Starwood Hotels
& Resorts Worldwide, Inc. and Enterprise Hospitality Solutions, Inc., April
2000 - This agreement is not assignable by EHS to GETS without written
consent of Starwood
SCHEDULE 2.6
GETS Litigation
Paul Weathers - GETS has entered into a settlement agreement with a former
employee, Paul Weathers, concerning his claim of wrongful termination
MAI Systems Corporation - EHS has entered into a settlement agreement with
MAI concerning a claim by EHS for unpaid royalties and a cross-claim by MAI
<PAGE>
SCHEDULE 2.8
Tax Matter exceptions of GETS
IRS notice to Lodging Touch Systems for the year 1994 asserting an unpaid
balance in the amount of $12,862.70 - The IRS has confirmed to Skinner
Tameron & Company LLP that the balance has been paid, and the company is
seeking an abatement of penalties and interest
Income Tax Returns for Enterprise Hospitality Solutions, Inc. for the years
1997, 1998 and 1999 prepared by Skinner Tameron & Company LLP were
previously supplied to Pegasus
Global Enterprise Technology Solutions, LLC has filed no tax returns to date
SCHEDULE 2.9(d)
Tangible Assets of GETS and GETS Affiliates not in good condition and repair
None.
SCHEDULE 2.10
Absence of Changes
Paul Weathers - GETS has entered into a settlement agreement with a former
employee, Paul Weathers, concerning his claim of wrongful termination
MAI Systems Corporation - EHS has entered into a settlement agreement with
MAI concerning a claim by EHS for unpaid royalties and a cross-claim by MAI
<PAGE>
SCHEDULE 2.11(a)
List of Contracts and Commitments of GETS and GETS Affiliates
(i) Employment Agreements
Christian Rivadalla
Elizabeth Rivadalla
Mark Harris
Michael DiModugno
Ric Patrick
Ken Taylor
(ii) Confidentiality Agreements
IBM
Best Western International
GEAC
(iii) None
(iv) East Valley Community Bank Line of Credit
(v) East Valley Community Bank Line of Credit
(vi) None
(vii) AVIR, LLC lease, Highline Capital Lease, Great America Leasing
(viii) Best Western International Outsourcing Agreement
(ix) Best Western International 2 Way Connectivity Agreement
(x) Best Western International Outsourcing Agreement
(xi) MAI Systems Settlement Agreement
(xii) MAI Systems Settlement Agreement
(xiii) Highline Capital Lease, Great America Leasing
(xiv) None
(xv) None
(xvi) None
(xvii) Best Western International 2 Way Connectivity Agreement
(xviii) RIVA, Inc., CASH, IIS, SDNS, Ideasolv
(xix) None
(xx) AVIR, LLC Lease
(xxi) MAI Systems Settlement Agreement, Paul Weathers Settlement Agreement
(xxii) Material Agreements - Tradewinds Agreement, Genuity Agreement,
Journey's End Corporation Agreement, Loan Agreement between Christian
Rivadalla and GETS, Starwood Hotels & Resorts Worldwide
<PAGE>
SCHEDULE 2.11(b)
Obligations in connection with contracts or commitments not performed by
GETS, GETS Affiliates and their respective Predecessors
None
SCHEDULE 2.11(c)
Notices required to be delivered to any Person under any contract or
commitment of GETS and GETS Affiliates
Enterprise Hospitality Solutions/Best Western International Property
Management Services Outsourcing Agreement, October 12, 1999 - This agreement
is not assignable by EHS to GETS without written consent of Best Western
Software License and Maintenance Agreement between Starwood Hotels & Resorts
Worldwide, Inc. and Enterprise Hospitality Solutions, Inc., April 2000 -
This agreement is not assignable by EHS to GETS without the written consent
of Starwood
SCHEDULE 2.11(d)
Contracts or commitments containing provisions requiring termination in the
event of a change of control or change in ownership of GETS or GETS
Affiliates
Enterprise Hospitality Solutions/Best Western International Property
Management Services Outsourcing Agreement, October 12, 1999 - This agreement
is not assignable by EHS to GETS without the written consent of Best
Western. In the event that EHS is acquired by merger, consolidation or sale
of assets, or any transaction or series of transactions resulting in the
sale, transfer, or other disposition of more than fifty percent (50%) of any
class or series of EHS voting securities, BWI must approve of such
transaction or, in the event it fails to approve, then either party may
terminate this agreement on 30 days notice. In the event that Christian
Rivadalla does not hold a controlling vote or veto rights on all board of
director decisions and/or fails to hold a senior position of CEO, President
and/or Chairman of the Board of EHS during the first 5 years of this
agreement, Best Western may terminate this agreement if good faith
negotiations fail to resolve any differences in the leadership of EHS to
Best Western's reasonable satisfaction.
Software License and Maintenance Agreement between Starwood Hotel & Resorts
Worldwide, Inc. and Enterprise Hospitality Solutions, Inc., April 2000 -
This agreement is not assignable by EHS to GETS without the written consent
of Starwood, provided however that EHS may assign its rights or delegate its
obligations under the agreement to any Person who acquires all or
substantially all of the assets of EHS. In the event, EHS shall remain
secondarily liable for the assigned obligations.
<PAGE>
SCHEDULE 2.11(e)
Oral contracts or commitments of GETS and GETS Affiliates
None
SCHEDULE 2.11(f)
Business contracts with any Governmental Entity of GETS and GETS Affiliates
None
SCHEDULE 2.12
Laws not complied with by GETS or GETS Affiliates
None
SCHEDULE 2.13
List of Receivables of GETS and GETS Affiliates
Accounts Receivable List
MAI Settlement Agreement - this agreement represents a partial comprise of
certain accounts receivable of EHS
SCHEDULE 2.14
List of Member Affiliate Transactions
AVIR, LLC, an Arizona limited liability company
RIVA, Inc., an Arizona C corporation
Ideasolv, LLC, an Arizona limited liability company
Employment Agreements of Christian Rivadalla and Elizabeth Rivadalla
SCHEDULE 2.15
Employee Listing
<PAGE>
SCHEDULE 2.15(a)
Complete list of Plans of GETS and GETS Affiliates
GETS Employment Contract List
Jan Angermair
Matt Bitter
Susan Burhans
Joel Campbell
Craig Cappel
Michael DiModugno
Mark Harris
Paolo Hutchison
Ramon Leon
Craig Little
Ric Patrick
Brian Pavlich
Terri Pintus
George Richardson
Christian Rivadalla
Elizabeth Rivadalla
David Schwarz
Ken Taylor
Jason Tilley
Eye Care Plan of America
Great West Medical
United Concordia (Dental)*
Guarantee Life (Disability)*
Guarantee Life (Group Long Term)*
ADP 401k Plan*
Incentive Bonus Plan
*Changing Plans as of 11/01/00
<PAGE>
SCHEDULE 2.15(c)
Labor Matters
Paul Weathers - GETS has entered into a settlement agreement with a former
employee, Paul Weathers, concerning his claim of wrongful termination
SCHEDULE 2.16
Insurance policies of GETS and GETS Affiliates
ITT Hartford (Business Liability)* (expires 8.20.01)
ITT Hartford (Workers Compensation)** (expires 10.01.01)
ITT Hartford (Acura Insurance) (expires 8.20.01)
* Changing Plans as of 11/01/00
** Changing carriers as of 11/01/00
<PAGE>
SCHEDULE 2.17
Twenty largest customers and twenty largest suppliers of GETS and GETS
Affiliates
Largest Suppliers (there are only 16)
AT&T
Avis Rental Car
Boise Cascade
Dell Computers
Federal Express
Genuity
Gateway Computers
Great American Leasing Corp.
Highline Capital Leasing
Insight Direct
Office Max
Sprint PCS
Teligent
US West
Verizon Wireless
Write Solutions
Largest Customers
Rezmark
InnSuites
Westmont
MAI Systems
BW JFK Airport
BW Stovall's Inn
BW Landmark Hotel
BW Hotel Acadiana
BW Springdale Conf Center
BW International Inn
La Cava Companies
BW Timber Cove Lodge
BW Stevens Inn
BW Inn On the Park
BW Blue Ash
BW Heritage Inn
Reneson Hotel Group
Sol Melia
La Quinta
Starwood Hotels
<PAGE>
SCHEDULE 2.18
List of banks, savings institutions and other financial institutions of GETS
and GETS Affiliates and each Person holding power of attorney on behalf of
each account
East Valley Community Bank
General Bank Account
Christian Rivadalla
Elizabeth Rivadalla
Michael DiModugno
ADP
Employee Benefits Account
Christian Rivadalla
Elizabeth Rivadalla
Michael DiModugno
Great West Insurance
Benefits 125 Account
Christian Rivadalla
Elizabeth Rivadalla
Michael DiModugno
Great West Insurance
Bank of Montreal
Christian Rivadalla
Elizabeth Rivadalla
Michael DiModugno
Michael Smith
Krista Merserau
ADP Canada
SCHEDULE 2.20(a)
List of Software and Proprietary Assets of GETS and GETS Affiliates
Software License Agreement
Patent Assignments
Copyright Registration Numbers
Trademark Registration Numbers
SCHEDULE 2.20(e)
Transactions contemplated by this Agreement that have a material adverse
effect on GETS's right, title and interest in and to the Proprietary Assets
None
<PAGE>
SCHEDULE 4.1(e)
List of key management and personnel of GETS to be considered for employee
incentive plans
Jan Angermair Mitch McCrossen
Jim Ascenzo Sylvia Meraz
Bernard Berman Krista Mersereau
Ben Bernard Valantina Musa
Matt Bitter Luis Novelo
Steve Boehm Ric Patrick
David Bridge Mark Peterson
Debra Brown Scott Phillips
James Burnett Rita Pi
Joel Campbell Tricia Pickering
Craig Cappel Vin Pinneo
Robert Classen Terri Pintus
Bryan Cowell Stuart Porter
Michael Crain George Richardson
Michael DiModugno David Schwarz
Jeffrey Donaldson Kimberly Scrivens
Clint Craney Don Seaton
Christopher Fadley Kelly Selvig
Sidney Farrar Charles Sherbow
Chris Gatlin Michael Smith
Vito Giove Leah Sonderberg
Jeremy Graham Kevin Sundberg
Mark Harris Ken Taylor
Chantal Herbert Richard The
Jennifer Hill Jason Tilley
Jonathan Hoekstra Susan Valdiveso
Kathryn Hoffman-Paul Ryan Van Cleave
Paolo Hutchison Bil Waggoner
Joseph Kamran Francis Wendowski
Arun Kumar Genevieve Wiitanen
Jeremy Lander Adam Williams
Katherine LaRochelle Noah Williams
Ramon Leon Stacy Williams
Craig Little Thomas Wilson
Jorge Lopez Tara Woodard
Stephen Lopez Cortney Zane
Tam Ly Feng Zhou (Frank)
Nancy MacDonell Wayne Zimpleman
Pamela Marks
Eric Marshall
<PAGE>
SCHEDULE 6.2(j)
GETS Employment Contract List
Jan Angermair
Matt Bitter
Susan Burhans
Joel Campbell
Craig Cappel
Michael DiModugno
Mark Harris
Paolo Hutchison
Ramon Leon
Craig Little
Ric Patrick
Brian Pavlich
Terri Pintus
George Richardson
Christian Rivadalla
Elizabeth Rivadalla
David SchwarzKen Taylor
Jason Tilley
<PAGE>
EXHIBIT 1.4.1
Certificate of Ownership Representing the Initial Membership Interest
purchased by Pegasus
EXHIBIT 1.4.2
Software Development and License Agreement
<PAGE>
EXHIBIT 1.4.3
GLOBAL ENTERPRISE TECHNOLOGY SOLUTIONS, LLC
--o0o--
UNANIMOUS WRITTEN CONSENT OF THE MEMBERS
IN LIEU OF SPECIAL MEETING
October 27, 2000
--o0o--
Pursuant to the Operating Agreement of Global Enterprise Technology
Solutions, LLC, an Arizona limited liability company (the "Company") and the
undersigned, being all of the members of the Company (the "Members"), hereby
waive notice of meeting and consent to the taking of each action set forth
below as if an actual meeting of Members had been held. The following
actions shall constitute the valid action of the Members and shall have the
safe force and effect as if such actions had been authorized and taken at a
formal special meeting of the Members duly convened and held on the above
date.
WHEREAS, the Company wishes to approve a Purchase Agreement among the
Company, Pegasus Solutions, Inc., Enterprise Hospitality Solutions, Inc.
("Pegasus"), the Rivadalla Family Trust and Christian Rivadalla (the
"Purchase Agreement") whereby Pegasus shall purchase part or all of the
ownership interest in the Company.
NOW THEREFORE BE IT RESOLVED, that the Members do hereby adopt the
Purchase Agreement and consent to and approve the consummation of the
Purchase Agreement pursuant to and in accordance with its terms.
FURTHER RESOLVED, that the Members do hereby expressly consent to the
transfers to Pegasus of membership interests in the Company pursuant to the
Purchase Agreement and waive their right of first refusal related to such
transfers of interests to Pegasus.
FURTHER RESOLVED, that the Manager, or any other Members of the Company
designated by the foregoing Manager, are hereby authorized and directed to
take all such actions and prepare, execute and file any and all such
documents and instruments as may be necessary or appropriate in their
discretion to secure any required approval of the Purchase Agreement or the
transactions contemplated therein by the State of Arizona and/or any federal
regulatory authority.
FURTHER RESOLVED, that the aforesaid Manager or Members are authorized
and directed to execute and deliver all such other documents and such other
acts as may be necessary to desirable to carry into effect the intentions of
the foregoing resolutions.
<PAGE>
FURTHER RESOLVED, that any and all actions heretofore taken by any of
the aforesaid officers in furtherance of the foregoing resolutions are
hereby in all respects ratified, confirmed and approved.
Enterprise Hospitality Solutions, Inc.
By: /s/ C. RIVADALLA
Member: Christian Rivadalla, President
Date: 10/27/00
The Rivadalla Family Trust
Dated May 1, 1997
By: /s/ C. RIVADALLA
Member: Christian Rivadalla, Co-Trustee
Date: 10/27/00
By: /s/ ELIZABETH RIVADALLA
Member: Elizabeth Rivadalla, Co-Trustee
Date: 10/27/00
/s/ C. RIVADALLA
Christian Rivadalla, Manager
<PAGE>
EXHIBIT 1.4.4
Investment Representation Letter of Enterprise Hospitality Solutions, Inc.
In connection with the Purchase Agreement among Pegasus Solutions, Inc.
(the "Company"), Enterprise Hospitality Solutions, Inc. ("Purchaser"),
Global Enterprise Technology Solutions, LLC, the Rivadalla Family Trust and
Christian Rivadalla and the receipt by Purchaser and Rivadalla Family Trust
of securities of the Company (the "Securities") by Purchaser described
therein, Purchaser represents to the Company the following:
(a) Purchaser 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. Purchaser is acquiring these Securities for investment for
Purchaser'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) Purchaser 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 Purchaser's investment intent as expressed herein.
Purchaser 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. Purchaser further
acknowledges and understands that the Company is under no obligation to
register the Securities. Purchaser 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 registra-
tion 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) Purchaser 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
Securities to the Purchaser, 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 "broker's 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.
<PAGE>
In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, 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) Purchaser 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. Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.
ENTERPRISE HOSPITALITY SOLUTIONS, INC.
By: /s/ C. RIVADALLA
Print: Christian Rivadalla
Title: CEO and President
Date: 10/31/00
<PAGE>
Investment Representation Letter of Rivadalla Family Trust
In connection with the Purchase Agreement among Pegasus Solutions, Inc.
(the "Company"), the Rivadalla Family Trust ("Purchaser"), Enterprise
Hospitality Solutions, Inc., Global Enterprise Technology Solutions, LLC,
and Christian Rivadalla and the receipt by Purchaser and Enterprise
Hospitality Solutions, Inc. of securities of the Company (the "Securities")
by Purchaser described therein, Purchaser represents to the Company the
following:
(a) Purchaser 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. Purchaser is acquiring these Securities for investment for
Purchaser'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) Purchaser 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 Purchaser's investment intent as expressed herein.
Purchaser 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. Purchaser further
acknowledges and understands that the Company is under no obligation to
register the Securities. Purchaser 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 registra-
tion 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) Purchaser 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
Securities to the Purchaser, 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 "broker's 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.
<PAGE>
In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, 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) Purchaser 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. Purchaser understands that no assurances can be given that
any such other registration exemption will be available in such event.
RIVADALLA FAMILY TRUST
By: /s/ C. RIVADALLA
Print: Christian Rivadalla
Title: Co-Trustee
Date: 10/31/00
<PAGE>
EXHIBIT 1.5
Members' Certificate
The undersigned, being all of the Members of Global Enterprise
Technology Solutions, LLC, an Arizona limited liability company (the
"Company"), pursuant to Section 1.5 of the Purchase Agreement dated October
31, 2000 by and among the Company, Pegasus Solutions, Inc., a Delaware
corporation, Enterprise Hospitality Solutions, Inc., an Arizona Corporation,
the Rivadalla Family Trust and Christian Rivadalla, individually, (the
"Agreement") do hereby certify on behalf of the Company as follows:
1. The representations and warranties of the Company set forth in the
Agreement are true and correct in all material respects, except that
any such representation and warranty that is qualified by the terms
material, materially or like terms shall be true and correct in all
respects, on and as of the date hereof.
2. The Company has performed in all material respects, the obligations and
covenants required to be performed by the Company under the Agreement
on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective as of the _________ day of ______________, 2000.
Member: Enterprise Hospitality Solutions, Inc.
By: __________________________________
Print: __________________________________
Member: Rivadalla Family Trust
By: __________________________________
Print: __________________________________
<PAGE>
Officer's Certificate
Of
Enterprise Hospitality Solutions, Inc.
The undersigned, being the Chief Executive Officer of Enterprise
Hospitality Solutions, Inc., an Arizona Corporation (the "Company"),
pursuant to Section 1.5 of the Purchase Agreement dated October 31, 2000 by
and among the Company, Pegasus Solutions, Inc., a Delaware corporation,
Global Enterprise Technology Solutions, LLC, an Arizona limited liability
company, the Rivadalla Family Trust and Christian Rivadalla, individually,
(the "Agreement") do hereby certify on behalf of the Company as follows:
1. The representations and warranties of the Company set forth in the
Agreement are true and correct in all material respects, except that
any such representation and warranty that is qualified by the terms
material, materially or like terms shall be true and correct in all
respects, on and as of the date hereof.
2. The Company has performed in all material respects, the obligations and
covenants required to be performed by the Company under the Agreement
on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective as of the _________ day of ______________, 2000.
Enterprise Hospitality Solutions, Inc.
By: __________________________________
Print: __________________________________
<PAGE>
Certificate
Of
Rivadalla Family Trust
The undersigned, being the Co-Trustee of the Rivadalla Family Trust
(the "Trust"), pursuant to Section 1.5 of the Purchase Agreement dated
October 31, 2000 by and among the Company, Pegasus Solutions, Inc., a
Delaware corporation, Global Enterprise Technology Solutions, LLC, an
Arizona limited liability company, Enterprise Hospitality Solutions, Inc.,
an Arizona Corporation and Christian Rivadalla, individually, (the
"Agreement") do hereby certify on behalf of the Company as follows:
1. The representations and warranties of the Trust set forth in the
Agreement are true and correct in all material respects, except that
any such representation and warranty that is qualified by the terms
material, materially or like terms shall be true and correct in all
respects, on and as of the date hereof.
2. The Trust has performed in all material respects, the obligations and
covenants required to be performed by the Trust under the Agreement on
or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective as of the _________ day of ______________, 2000.
Co-Trustee: ______________________________
Print: ____________________________________
Co-Trustee: ______________________________
Print: ____________________________________
<PAGE>
Certificate
Of
Christian Rivadalla
The undersigned, Christian Rivadalla, individually ("Rivadalla"),
pursuant to Section 1.5 of the Purchase Agreement dated October 31, 2000 by
and among the Company, Pegasus Solutions, Inc., a Delaware corporation,
Global Enterprise Technology Solutions, LLC, an Arizona limited liability
company, Enterprise Hospitality Solutions, Inc., an Arizona Corporation and
the Rivadalla Family Trust (the "Agreement") do hereby certify on behalf of
the Company as follows:
1. The representations and warranties of Rivadalla set forth in the
Agreement are true and correct in all material respects, except that
any such representation and warranty that is qualified by the terms
material, materially or like terms shall be true and correct in all
respects, on and as of the date hereof.
2. Rivadalla has performed in all material respects, the obligations and
covenants required to be performed by Rivadalla under the Agreement on
or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
effective as of the _________ day of ______________, 2000.
__________________________________________
Christian Rivadalla
<PAGE>
EXHIBIT 2.7
Financial Statements of Enterprise Hospitality Solutions, Inc. for the years
ended December 31, 1999 and December 31, 1998, along with Independent
Auditors' Report submitted by Skinner & Tameron Company, LLP dated March 27,
2000
Unaudited Balance Sheet of Global Enterprise Hospitality Solutions, LLC for
the period ending September 30, 2000
EXHIBIT 2.9(a)
Office Lease
EXHIBIT 2.9(b)
Exceptions to good and valuable title of tangible properties and assets
of GETS and GETS Affiliates
EXHIBIT 2.19
Invention Assignment and Confidentiality Agreement
EXHIBIT 5.4
Assignment of GETS Affiliates, the Members and Rivadalla of all intellectual
property rights in the Software or Proprietary Assets of GETS to GETS
<PAGE>
EXHIBIT 6.2(d)
First Amendment to Operating Agreement of
Global Enterprise Technology Solutions, LLC
This First Amendment to the Operating Agreement of Global Enterprise
Technology Solutions, LLC (the "First Amendment") is entered into by and
between Enterprise Hospitality Solutions, Inc. and The Rivadalla Family
Trust (collectively, "Members") effective as of October 31, 2000 (the
"Effective Date").
RECITALS
WHEREAS, the Members have heretofore executed an Operating Agreement
with an effective date of September 1, 1999 (the "Agreement").
WHEREAS, the Members unanimously consent and agree to amending the
Agreement as set forth herein.
WHEREAS, the Members intend for this First Amendment to set forth in
its entirety their agreement to amend the Agreement as set forth herein.
Agreement
In consideration of the above recitals, it is hereby agreed as follows:
1. Section 5 of the caption page of the Agreement is hereby deleted in
its entirety and replaced with the following:
Managers:
The names and addresses of the Managers of the Company are:
Christian Rivadalla (Designated Manager)
1380 Auto Drive
Tempe, Arizona 85284
Ken Taylor
1380 West Auto Drive
Tempe, Arizona 85284
Christian Rivadalla[Rivadalla Family Trust Representative]
13050 E. Turquoise Avenue
Scottsdale, AZ 85259
Jerome L. Galant
Pegasus Solutions, Inc.
3811 Turtle Creek Boulevard
Suite 1100
Dallas, Texas 75219
Robert Bennett
Pegasus Solutions, Inc.
3811 Turtle Creek Boulevard
Suite 1100
Dallas, Texas 75219
<PAGE>
2. Section 1.9.l of the Agreement is hereby deleted in its entirety
and is replaced with the following:
1.9.l "Manager" shall mean the persons or other entities as set
forth on the caption page as Managers, or any other persons or entities
that become Managers pursuant to this Agreement.
3. Section 3.1 of the Agreement is hereby deleted in its entirety and
is replaced with the following:
3.1 Management. The business and affairs of the Company shall be
managed exclusively by its designated Manager. The Manager shall
direct, manage and control the business of the Company to the best of
the Manager's ability and shall have full and complete authority, power
and discretion to make any and all decisions and to do any and all
things which the Manager shall deem to be reasonably required to
accomplish the business and objectives of the Company; provided,
however, that no act shall be taken or sum expended or obligation
incurred by the Company or Manager with respect to a matter within the
scope with any of the Major Decisions ("Major Decisions") affecting the
Company, as defined below, unless such Major Decisions have been
approved by a Majority-In-Interest or all of the Members, whichever is
applicable. No Member other than a Manager shall have the authority to
act for or bind the Company.
4. Section 3.2.b of the Agreement is hereby deleted in its entirety
and is replaced with the following:
3.2.b All Major Decisions set forth in Section 3.2.a shall
require the approval of those Members constituting a Majority-In-
Interest; provided, however, such approval shall not be unreasonably
withheld.
5. A new Section 3.2.c is hereby added to the Agreement as follows:
3.2.c The following Major Decisions shall require the approval of
all Members of the Company:
(1) To issue, convey, sell, pledge, transfer, dispose of or
encumber any ownership or other interest in the Company;
(2) To convey, sell, pledge, dispose of or encumber any of the
Company's assets;
(3) To enter into or propose to enter into any agreement for the
Company to be acquired by merger, exchange, consolidation,
acquisition of stock or assets or otherwise; and
(4) To incur any liability on behalf of the Company in excess of
$50,000.
<PAGE>
6. A new Section 3.3.b is hereby added to the Agreement as follows:
3.3.b All duties of the Manager provided for in this Agreement may
be performed with the approval of a simple majority of the Managers;
provided that no action may be taken without providing at least ten
days prior written notice to all Managers.
7. Section 3.4 of the Agreement is hereby deleted in its entirety and
is replaced with the following:
3.4 Number, Tenure and Qualifications. The number of Managers of
the Company shall be five. Each Manager shall hold office until the
next annual meeting of Members or until its successor shall be elected
and qualified. The Manager needs not be a resident of the State of
Arizona or a Member of the Company.
8. Section 9.1.a (4) of the Agreement is hereby deleted in its
entirety.
9. This First Amendment shall be and hereby is incorporated into the
Agreement for all intent and purposes and all terms, provisions and
definitions in the Agreement and all shall apply.
10. Except where inconsistent with the terms of this Amendment, the
Agreement is hereby ratified and confirmed in all respects.
11. This First Amendment, upon being executed by all Members, shall be
effective as of the Effective Date.
ENTERPRISE HOSPITALITY SOLUTIONS, INC.,
an Arizona corporation
By: ________________________________
Christian Rivadalla
President & Member
THE RIVADALLA FAMILY TRUST
By: ________________________________
Christian Rivadalla
Co-Trustee & Member
By: _______________________________
Elizabeth Rivadalla
Co-Trustee & Member
<PAGE>
EXHIBIT 6.2(f)
Legal Opinion of Watland, Allen & Lasee, PLLC
<PAGE>
EXHIBIT 6.2(h)
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment") is made
and entered into as of October 31, 2000 by and between Enterprise
Hospitality Solutions, Inc., an Arizona corporation and Christian Rivadalla
("Rivadalla") (collectively referred to as "Assignors"), and GETS, LLC, an
Arizona limited liability company ("Assignee" and together with Assignors,
the "Parties").
RECITALS
WHEREAS, Assignee has agreed to accept only those liabilities and
obligations of Assignors contained in the Agreements identified on Exhibit A
attached hereto ("Assigned Agreements") and Assignors have agreed to assign
and transfer such liabilities and obligations related only to the Assigned
Agreements identified on Exhibit A; and
WHEREAS, as a condition to such assignment, Assignee agreed to assume
all of the obligations of Assignors related to the Assigned Agreements.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
TERMS
1. Assignment of Rights. Effective as of the Effective Date, Assignors
hereby assign to Assignee all of the Assigned Agreements. Assignors hereby
covenant with Assignee, its successor and assigns, that it has good right
and authority to transfer the Assigned Agreements as aforesaid; and it will
warrant and defend the transfer of the Assigned Agreements unto Assignee,
its successors and assigns, against the lawful claims and demands of all
persons. All of such Assigned Agreements represent valid, binding and
assignable contracts, enforceable in accordance with their terms, and no
default has occurred in any of such contracts.
2. Further Assurances. Assignors hereby covenant and agree with
Assignee, its successors and assigns, to execute and deliver to Assignee
such other and further instruments of transfer, assignment and conveyance
and all such notices, releases and other documents and to use its best
efforts to secure all such consents and waivers as may be necessary more
fully to transfer, assign and convey to and vest in Assignee all and
singular the Assigned Agreements hereby transferred, assigned and conveyed
or intended so to be.
3. Assumption; No Change in Terms. Effective as of the Effective Date,
Assignee hereby accepts the Assigned Agreements and from and after the
Effective Date assumes and agrees to be bound by and perform all of the
terms, conditions, covenants, duties and obligations to be performed by
Assignors under the Assigned Agreements from and after the Effective Date to
the same extent as if Assignee had originally been named a party thereunder.
The terms of the Assigned Agreements shall remain unchanged and Assignee
shall adhere to all the terms of the Assigned Agreements fully as though it
were an original party thereunder.
<PAGE>
4. Consent. It is agreed and acknowledged by the Parties that if the
contemplated assignment of any of the Assigned Agreements requires the
consent of any other party or parties, then this Assignment is contingent
upon Assignors obtaining all such consents and that this Assignment will not
take effect until such time as such consents have been obtained in writing.
5. Counterparts. This Assignment may be executed in counterparts, each
of which shall be considered an original, but all of which shall constitute
on and the same document.
6. Governing Law. This Assignment shall be governed by the laws of the
State of Arizona.
7. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignors, Assignee, and their respective successors and assigns.
IN WITNESS WHEREOF, each party has executed and delivered this
Assignment on the date first written above.
ENTERPRISE HOSPITALITY
SOLUTIONS, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
CHRISTIAN RIVADALLA,
INDIVIDUALLY
___________________________________
Christian Rivadalla
GLOBAL ENTERPRISE TECHNOLOGY
SOLUTIONS, LLC
By: ______________________________
Name: ______________________________
Title: ______________________________
<PAGE>
EXHIBIT A
Assigned Agreements
1. Software License and Maintenance Agreement between Starwood Hotels and
Resorts Worldwide, Inc. and Enterprise Hospitality Solutions, Inc., dated
April 2000.
2. PMS Bulk License Purchase Agreement between Best Western International
and Enterprise Hospitality Solutions, Inc., dated June 26, 1997 and all
addendums thereto.
3. PMS Outsourcing Agreement between Best Western International and
Enterprise Hospitality Solutions, Inc., dated October 12, 1999.
4. Any and all contracts related to the provision of products or services to
any third party in whole or in part by GETS.
<PAGE>
EXHIBIT 6.2(j)
Employment Agreements
