CIO Employment Agreement - Joseph Nicholson

EXHIBIT 10.2





EXECUTIVE EMPLOYMENT AGREEMENT



THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is being entered into as of June 25, 1996 (the "Closing Date") by and between Pegasus Systems, Inc., a Delaware corporation (the "Company"), and Joseph W. Nicholson ("Executive").





A. Executive has served as Chief Information Officer of the Company since July 1995.



B. Pursuant to a Series A Preferred Stock Purchase Agreement, dated as of the Closing Date, by and among the Company, and the entities listed on Exhibit A thereto (the "Purchasers"), the Purchasers are purchasing certain shares of Series A Preferred Stock, par value $0.01 per share, of the Company (the "Purchase").



C. The Purchasers have required, as a condition to consummating the Purchase, that Executive execute and deliver this Agreement.





In order to induce the Purchasers to consummate the Purchase, and in further consideration of the mutual covenants and agreements contained herein, the parties agree as follows:



1. EMPLOYMENT



1.1 TERM; DUTIES.



(a) TERM. Subject to Section 1.6 below, Executive agrees to serve as an employee of the Company during the period commencing on the Closing Date and ending on the date four (4) years from the Closing Date, subject to automatic one year annual renewals if neither party has provided the other with a written notice expressing an intent to terminate the Executive's employment with the Company 60 days prior to the beginning of such renewal period (the "Employment Term").



(b) DUTIES. During the Employment Term, Executive shall serve as the Chief Information Officer of the Company and in such capacity shall have such responsibilities and perform such duties as the Chief Executive Officer or the Company's Board of Directors may specify from time to time consistent with such position. Executive agrees to serve the Company faithfully and to the best of his ability, and to devote substantially all of his working time, attention and efforts during the Employment Term to the business and affairs of the Company. Executive shall not serve as a director, employee, consultant or advisor to any other corporation (other than the Company's affiliates) or other business enterprise without the prior written consent of the Company; provided, however, that Executive may serve in any capacity with any civic, educational or charitable organization or any trade association without the approval of the Board, so long as such activities do not interfere with his duties and obligations under this Agreement. Executive represents and warrants to the Company that he is under no contractual commitments inconsistent with his obligations set forth in this Agreement.



1.2 COMPENSATION. In consideration for all services to be performed under this Agreement, Executive shall receive the following compensation:



(a) SALARY. Executive shall be paid a base salary at a rate of not less than $14,583 per month, subject to increase annually at the discretion of the Compensation Committee of the Board of Directors and payable at such times as other executives of the Company receive their regular salary payments (the "Base Salary").



(b) BONUS PROGRAM. The Executive will be eligible to receive annual bonus payments in addition to the Base Salary. Such annual bonus shall be determined by the Compensation Committee in its discretion based on achievement of performance objectives established by the Compensation Committee of the Board of Directors from time to time.



(c) OPTION. The Company shall grant to Executive an option (the "Option") (or, at Executive's election, a stock purchase right to purchase shares of Common Stock of the Company (the "Common Stock") for a total of $112,500 shares of Common Stock) at an exercise price of $2.68 per share. Subject to Section 1.6(b)(ii) below, such Option will vest 1/4 on the first anniversary of the Closing Date and 1/48 after each subsequent month of employment, so that such Option would be fully vested four (4) years after the Closing Date based on continued employment.



(d) AUTOMOBILE ALLOWANCE. The Company agrees to pay Executive an automobile allowance of up to $500 per month.



(e) LIFE INSURANCE. To the extent commercially practicable, the Company shall maintain life insurance with respect to Executive, in the amount of $1,333,000 with the Company as beneficiary and $667,000 with Executive's estate as beneficiary.



The Company shall be entitled to withhold from the compensation payments otherwise required to be made to Executive such amounts as may be required under applicable tax laws and other applicable legal requirements.



1.3 OTHER BENEFITS. The Company shall provide to Executive, during the Employment Term, such other benefits (including vacation) as the Company makes generally available to its other employees and makes generally available to its executives during the Employment Term, subject to Executive's satisfaction of the respective eligibility requirements for such benefits.









1.4 NO OTHER COMPENSATION. Executive acknowledges and agrees that he shall not be entitled to receive from the Company or any other affiliate of the Company, including but not limited to, The Hotel Industry Switch Company, The Hotel Clearing Corporation, the Hotel Clearing Corporation (U.K.) and TravelWeb, Inc. any salary, bonus or other compensation or benefit of any nature (whether relating to any period prior to the Closing Date or relating to any period after the Closing Date) except as expressly provided in Sections 1.2 and 1.3 above. Executive represents and warrants to the Company that he is not aware of any claims or rights against the Company arising directly or indirectly from his past employment with the Company, and Executive hereby releases and discharges the Company and its affiliates from all claims, rights, causes of action, demands and obligations arising directly or indirectly from his past employment with the Company.



1.5 EXPENSES. Executive shall be entitled to reimbursement from the Company for reasonable out-of-pocket business expenses reasonably incurred by Executive during the Employment Term in the performance of Executive's duties under this Agreement, in accordance with the Company policies in effect from time to time; provided, however, that the Company shall not be required to reimburse Executive for any such expenses unless: (a) Executive presents vouchers and receipts indicating in reasonable detail the amount and business purpose of each of such expenses; and (b) Executive otherwise complies with the Company's reimbursement policies established from time to time and in effect during the Employment Term.



1.6 TERMINATION.



(a) Executive and the Company acknowledge and agree that either the Company or Executive shall have the right to terminate Executive's employment at any time during the Employment Term with or without Cause (as defined in Section 1.7), by delivering written notice of termination to the other thirty (30) days prior to the date of termination. Upon any such termination of this Agreement, Executive's employment with the Company shall terminate and, except as provided in Section 1.6(b) or 1.6(c) below, as applicable, the Company shall have no further monetary obligation or other obligation of any nature to Executive under this Agreement or with respect to his employment or the termination of his employment (except as expressly required by applicable law).



(b) If (i) the Company terminates this Agreement without Cause (as defined in Section 1.7 below) during the Employment Term, (ii) Executive satisfies all of his obligations relating to the termination of his employment under this Agreement as specified in Sections 2, 3 and 4.1 hereof), and (iii) Executive executes and delivers to the Company a general release of liability (satisfactory in form and substance to the Company) in favor of the Company, then so long as Executive does not breach Section 2, 3 or 4.1 hereof.



(A) The Company shall pay to Executive the Base Salary

referred to in Section 1.2(a) above for a period of twelve (12) months

following the date of termination, payable over such twelve-month period

at such times as executives of the Company receive their regular salary

payments;





(B) Vesting of the Option shall accelerate so that (i) if

termination of employment occurs prior to the date being three (3) years

and one (1) month after the Closing Date, Executive's Option shall vest

for an additional 28,125 shares of Common Stock (in addition to shares

vested as of the date of termination) or (ii) if termination of

employment occurs on or after the date being three (3) years and one (1)

month after the Closing Date, Executive's Option shall fully vest; and


...