EXHIBIT 10.4


                             EMPLOYMENT AGREEMENT


      THIS AGREEMENT is entered into  as of the 1st  day of August, 2001,  by
 and between Pegasus Solutions, Inc., a Delaware corporation (the  "Company")
 and Susan Cole (the "Executive").

      WHEREAS, the  Board  of Directors  of  the Company  (the  "Board")  has
 determined that it is essential and in the best interest of the Company  and
 its stockholders to enter into this Agreement to retain the services of  the
 Executive and to ensure Executive's continued dedication and efforts; and

      WHEREAS, in order to  induce the Executive to  enter into and  continue
 employment by the Company, the Company desires to provide the Executive with
 certain benefits during the term of Executive's employment and, in the event
 Executive's employment  is terminated,  to provide  the Executive  with  the
 benefits and payments described herein.

      NOW, THEREFORE, in  consideration of the  respective agreements of  the
 parties contained herein, it is agreed as follows:

 1.   Employment Term.

      The "Employment Term"  shall commence on  May 7,  2001 (the  "Effective
 Date") and shall  expire on  the fourth  anniversary of  the Effective  Date
 provided  that  such  term  will  be  automatically  renewed  and   extended
 indefinitely after  the  fourth  anniversary of  the  Effective  Date  until
 terminated as provided herein, in the event Executive remains in the  employ
 of the Company after the fourth anniversary of the Effective Date.

 2.   Employment.

      (a)       Subject to the  provisions of Section  8 hereof, the  Company
 agrees to  continue to  employ the  Executive and  the Executive  agrees  to
 remain in the employ of the Company during the Employment Term.  During  the
 Employment Term,  the Executive  shall be  employed  as the  Executive  Vice
 President and Chief Financial Officer of  the Company.  The Executive  shall
 perform  the  duties,  undertake  the  responsibilities  and  exercise   the
 authority  customarily  performed,  undertaken  and  exercised  by   persons
 situated in a similar executive capacity.  Executive shall also promote,  by
 entertainment or otherwise, the business of the Company.

      (b)       During the Employment Term, excluding periods of vacation and
 sick leave  to which  the Executive  is entitled,  the Executive  agrees  to
 devote reasonable  attention and  time during  usual business  hours to  the
 business and affairs of the Company to the extent necessary to discharge the
 responsibilities assigned to the Executive hereunder.  The Executive may (1)
 serve on corporate,  civil or charitable  boards or  committees, (2)  manage
 personal investments  and  (3) deliver  lectures  and teach  at  educational
 institutions, so long as such activities do not significantly interfere with
 the performance  of  the  Executive's responsibilities  hereunder.    It  is
 expressly understood and agreed that to the extent that any such  activities
 have been  conducted by  the  Executive prior  to  the Effective  Date,  the
 continued conduct of such activities (or  the conduct of activities  similar
 in nature and  scope thereto)  subsequent to  the Effective  Date shall  not
 thereafter be deemed to  interfere with the  performance of the  Executive's
 responsibilities to the Company.

 3.   Compensation.

      (a)       Base Salary.   Beginning on the  Effective Date, the  Company
 agrees to pay or cause to be paid to the Executive an annual base salary  as
 mutually agreed,  and  as  may  be  increased  from  time  to  time  by  the
 Compensation Committee of the  Board (hereinafter referred  to as the  "Base
 Salary").   Such  Base  Salary  shall be  payable  in  accordance  with  the
 Company's customary practices applicable to its executives.

      (b)       Annual Bonus.   In  addition to  Base Salary,  the  Executive
 shall be awarded, for each fiscal year ending during the Employment Term, an
 annual discretionary bonus (the "Annual Bonus") in accordance with the terms
 and conditions of  the bonus plan  approved by  the Compensation  Committee.
 Any actual payment or award  under such Annual Bonus  plan, and the size  of
 any payment or  award, will be  in accordance with  the terms  of the  plan.
 Each such Annual  Bonus shall be  paid no later  than the end  of the  third
 (3rd) month of the fiscal year next following the fiscal year for which  the
 Annual Bonus  is awarded,  unless the  Executive shall  elect to  defer  the
 receipt of such Annual Bonus.

      (c)       Supplemental Employee Retirement  Plan.  In  addition to  the
 Base Salary and Annual Bonus, the Executive shall be entitled to participate
 in the Company's  Supplemental Employee Retirement  Plan as  adopted by  the
 Company effective January 1,  2000 and as  amended thereafter provided  that
 Executive has agreed to  such amendment. Executive shall  not be subject  to
 any  amendment  to  the   Supplemental  Employee  Retirement  Plan   without
 Executive's written consent.

      (d)       Stock Plans.  Executive shall  be entitled to participate  in
 the Company's Stock  Option Plans, Employee  Stock Purchase  Plans and  such
 other stock-related plans as may be applicable to executives of the  Company
 and to receive  such stock option  grants and any  and all  other rights  of
 participation as may be provided therein.

      (e)       Car  Allowance.    Executive  shall  be  entitled  to  a  car
 allowance of Seven Hundred Fifty Dollars ($750.00) per month for each  month
 during the term of this Agreement.

 4.   Employee Benefits.

      During the Employment  Term and beginning  on the  Effective Date,  the
 Executive shall be entitled  to participate in  all employee benefit  plans,
 practices and  programs maintained  by the  Company  and made  available  to
 employees generally, including, without limitation, all pension, retirement,
 profit sharing, savings, medical, hospitalization, disability, dental,  life
 or travel  accident  insurance benefit  plans.   Unless  otherwise  provided
 herein,  the   compensation  and   benefits  under,   and  the   Executive's
 participation in, such plans,  practices and programs shall  be on the  same
 basis and terms as are applicable to employees of the Company generally, but
 in no  event on  a basis  less  favorable in  terms  of benefit  levels  and
 coverage than offered to other similarly situated executives of the Company.
 The Company may  reduce benefit levels  if such changes  are part of  broad-
 based changes in  the Company's benefit  programs offered  generally to  all
 employees.  Notwithstanding  the foregoing,  except as  otherwise set  forth
 herein, nothing  herein shall  obligate the  Company  to adopt  such  plans,
 practices or programs.

 5.   Executive Benefits.

      During  the  Employment  Term,  the  Executive  shall  be  entitled  to
 participate  in  all  executive  benefit  or  incentive  compensation  plans
 maintained or  established  by the  Company  for the  purpose  of  providing
 compensation and/or benefits to executives of the Company including, but not
 limited to, any supplemental retirement, salary continuation, stock  option,
 deferred compensation, supplemental medical or life insurance or other bonus
 or incentive compensation  plans; provided, however,  the grant  of a  stock
 option in any year is  not guaranteed and will  be dependent on the  Board's
 evaluation of  the  Executive's  performance.    Unless  otherwise  provided
 herein,  the   compensation  and   benefits  under,   and  the   Executive's
 participation in, such plans shall be on  the same basis and terms as  other
 similarly situated executives  of the Company.   No additional  compensation
 provided under any  of such  plans shall be  deemed to  modify or  otherwise
 affect the terms of  this Agreement or any  of the Executive's  entitlements
 hereunder.  Notwithstanding  the foregoing,  except as  otherwise set  forth
 herein, nothing  herein shall  obligate the  Company  to adopt  such  plans,
 practices or programs.

 6.   Other Benefits.

      (a)       Fringe Benefits and Perquisites.  During the Employment Term,
 the Executive  shall be  entitled to  all  fringe benefits  and  perquisites
 generally made available by the Company to its executives.  Unless otherwise
 provided herein, the fringe benefits  and perquisites provided to  Executive
 shall be  on substantially  the  same basis  and  terms as  other  similarly
 situated executives of the Company.

      (b)       Expenses.    The  Executive  shall  be  entitled  to  receive
 reimbursement of all expenses reasonably incurred by him in connection  with
 the performance of Executive's duties  hereunder or for promoting,  pursuing
 or otherwise  furthering  the  business  or  interests  of  the  Company  in
 accordance with the accounting procedures and expense reimbursement policies
 of the Company as it shall adopt from time to time.

 7.   Vacation and Sick Leave.

      During the Employment Term, at such reasonable times as the Board shall
 in its discretion permit,  the Executive shall be  entitled without loss  of
 pay, to  absent  himself voluntarily  from  the performance  of  Executive's
 employment under this Agreement, provided that:

      (a)       The  Executive  shall  be  entitled  to  annual  vacation  in
 accordance with the policies as periodically established by the Board.

      (b)       The Executive shall be entitled  to sick leave (without  loss
 of pay) in accordance with the Company's policies as in effect from time  to
 time.

 8.   Termination.

      During the Employment Term, the Executive's employment hereunder may be
 terminated under the following circumstances:

      (a)       Cause.  The Company may terminate the Executive's  employment
 for "Cause".  A termination of employment is for "Cause" if the Executive:

      (1)       has been convicted  of or  plead guilty  or no  contest to  a
           felony;

      (2)       intentionally engaged in  conduct which  is demonstrably  and
           materially injurious to  the Company, monetarily  or otherwise  or
           from  which  Executive  derives  an  improper  material   personal
           benefit; provided, however, that no termination of the Executive's
           employment shall be  for Cause  as set  forth in  this clause  (2)
           until:

           (i)            there shall have been delivered to the Executive  a
           copy of  a written  notice setting  forth that  the Executive  was
           guilty of the conduct set forth in this clause (2) and  specifying
           the particulars thereof in reasonable detail; and

           (ii)           the  Executive   shall   have  been   provided   an
           opportunity to be heard by the  Board (with the assistance of  the
           Executive's counsel if  the Executive so  desires).   No act,  nor
           failure to  act,  on  the Executive's  part  shall  be  considered
           "intentional" unless Executive has acted,  or failed to act,  with
           an absence  of good  faith and  without a  reasonable belief  that
           Executive action or failure to act was in the best interest of the
           Company.

      (3)       commits gross malfeasance or  intentionally fails to  perform
           the duties  of the  Executive's position;  provided, however,  the
           Company shall first notify the  Executive in writing stating  with
           reasonable specificity  the action  or inaction  of the  Executive
           which forms the basis for such  notice and the Executive fails  to
           cure such malfeasance or failure within ten (10) days of the  date
           of such notice, and

      (4)       violates  any   valid   non-competition   or   non-disclosure
           agreement or the Company's insider trading policy, if any.

      Notwithstanding anything contained in  this Agreement to the  contrary,
 no failure to  perform by  the Executive after  a Notice  of Termination  is
 given  by  the  Executive  shall  constitute  Cause  for  purposes  of  this
 Agreement.

      (b)       Disability.    The  Company  may  terminate  the  Executive's
 employment  after  having  established  the  Executive's  Disability.    For
 purposes  of  this  Agreement,  "Disability"  means  a  physical  or  mental
 infirmity which  impairs the  Executive's ability  to substantially  perform
 Executive's material  duties  under this  Agreement  which continues  for  a
 period of at  least ninety (90)  consecutive days.   The Executive shall  be
 entitled to the compensation and benefits provided for under this  Agreement
 for any period during the Employment Term and prior to the Termination  Date
 (as hereinafter defined) resulting from the  Executive being unable to  work
 due to a  physical or  mental infirmity and  as otherwise  provided in  this
 Agreement in connection with Disability.  Notwithstanding anything contained
 in this  Agreement  to  the  contrary, if  prior  to  the  Termination  Date
 specified in a Notice  of Termination (as  hereinafter defined) relating  to
 the Executive's Disability, the Executive is  no longer under a  Disability,
 the Executive will be  entitled to return to  Executive's position with  the
 Company as set forth in this Agreement  in which event no Disability of  the
 Executive will be deemed to have occurred.

      (c)       Good Reason.

      (1)            The Executive may  terminate Executive's employment  for
      "Good Reason".   For purposes of  this Agreement,  "Good Reason"  shall
      mean the occurrence of any of the events or conditions described  below
      in subsections (i) through (vi) hereof:

           (i)                 If the Executive shall  cease to be the  Chief
           Financial Officer  of  the Company  (or  any successor  or  parent
           thereof) or upon the assignment to  the Executive of any  material
           duties or responsibilities which are inconsistent with Executive's
           position or responsibilities; or any removal of the Executive from
           or failure to  reappoint or  reelect him  to any  such offices  or
           positions, except during a period  of Disability or in  connection
           with the  termination of  Executive's employment  for  Disability,
           Cause, as a result of Executive's death, or by the Executive other
           than for Good Reason;

           (ii)                A reduction in the Executive's Base Salary  or
           any failure to pay the Executive  any compensation or benefits  to
           which Executive is  entitled within thirty  (30) days  of the  due
           date;

           (iii)               A Change of Control as hereinafter defined;

           (iv)                Any material  breach  by the  Company  of  any
           provision of  this  Agreement; provided,  however,  the  Executive
           shall first notify the Company in writing stating with  reasonable
           specificity the breach  by the Company  and the  Company fails  to
           cure such breach within ten (10) days of the date of such notice;

           (v)                 Any purported termination  of the  Executive's
           employment for Cause by the Company  which is found by a court  of
           competent jurisdiction or  an arbitrator  not to  comply with  the
           terms of Section 8(a); or

           (vi)                The  failure  of  the  Company  to  obtain  an
           agreement, reasonably  satisfactory  to the  Executive,  from  any
           successor or assign of the Company to assume and agree to  perform
           this Agreement, as contemplated in Section 13 hereof.

      (2)            The   Executive's   right   to   terminate   Executive's
      employment pursuant  to this  Section 8(c)  shall  not be  affected  by
      Executive's incapacity due to physical or mental illness.

      (d)       Voluntary Termination.  Upon  thirty (30) days prior  written
 notice, either the Executive  or the Company  may voluntarily terminate  the
 Executive's employment  hereunder at  any time;  provided, however,  in  the
 event of any such termination by the  Company, the Company shall pay to  the
 Executive the amounts set forth in Section 9(d) hereof.

 9.   Compensation Upon Termination.

      Upon termination of  the Executive's employment  during the  Employment
 Term, the Executive shall be entitled to the following benefits:

      (a)       If the  Executive's  employment  with the  Company  shall  be
 terminated by the Company for Cause or by the Executive other than for  Good
 Reason, the Company shall pay the  Executive all amounts earned and  accrued
 through the  Termination Date  but  not paid  as  of the  Termination  Date,
 including:

      (1)            the Base Salary,

      (2)            an amount equal to the Pro Rata Bonus,

      (3)            reimbursement  for  reasonable  and  necessary  expenses
      incurred by the Executive  on behalf of the  Company during the  period
      ending on the Termination Date,

      (4)            vacation pay, and

      (5)            sick leave (collectively, "Accrued Compensation").

      (b)       If the  Executive's  employment  with the  Company  shall  be
 terminated by  the  Company  for  Disability,  the  Company  shall  pay  the
 Executive all amounts earned or accrued through the Termination Date but not
 paid as of  the Termination Date,  including the Accrued  Compensation.   In
 addition, the Executive shall be entitled to the following:

      (1)            the Base  Salary  and  all  other  benefits  customarily
      received for  a  period of  one  (1)  year from  the  Termination  Date
      resulting from such Disability,

      (2)            an amount equal to  the Pro Rata Bonus.   The "Pro  Rata
      Bonus" is an  amount equal to  the maximum bonus  amount the  Executive
      would have been entitled to in the fiscal year of the Termination  Date
      multiplied by a fraction, the numerator of which is the number of  days
      in such fiscal year through the Termination Date and the denominator of
      which is 365,

      (3)            payments  as   more   specifically   provided   by   the
      Supplemental Employee Retirement Plan, and

      (4)            one (1) additional year of vesting from the  Termination
      Date of all stock option grants not then expired or terminated.

      (c)       If the  Executive's  employment  with the  Company  shall  be
 terminated by reason  of the Executive's  death, the Company  shall pay  the
 Executive all amounts earned or accrued through the Termination Date but not
 paid as of  the Termination Date,  including the Accrued  Compensation.   In
 addition, the  Company  shall  pay  to  the  Executive's  beneficiaries  the
 following:

      (1)            the Base  Salary  and  all  other  benefits  customarily
      received for a period of one (1) year from the date of such death,

      (2)            an amount equal to the Pro Rata Bonus,

      (3)            payments  as   more   specifically   provided   by   the
      Supplemental Employee Retirement Plan, and

      (4)            one (1) additional year of vesting from the  Termination
      Date of all stock option grants not then expired or terminated.

      (d)       If the  Executive's  employment  with the  Company  shall  be
 terminated by the Company voluntarily, without Cause or by the Executive for
 Good Reason, the  Company shall take  the following actions  and pay to  the
 Executive the following:

      (1)            all Accrued Compensation and a Pro Rata Bonus,

      (2)            the Company  shall  continue  to pay  the  Executive  as
      severance pay  and  in lieu  of  any further  compensation  (except  as
      otherwise provided herein)  a monthly payment  for a  period of  twelve
      (12) months  following  the  Termination  Date  (the  "Monthly  Payment
      Period") equal to the sum of (A) the Executive's monthly Base Salary in
      effect for the month immediately preceding the Termination Date and (B)
      one twelfth  (1/12)  of  the Bonus,  provided  that  if  Executive  has
      continuously performed pursuant to this Agreement for one (1) year from
      its Effective Date, the  Monthly Payment Period  shall be increased  to
      twenty-four (24) months.  The "Bonus" is an amount equal to the maximum
      bonus amount the Executive  would have been entitled  to in the  fiscal
      year of the Termination Date,

      (3)            during  the   twelve  (12)   month  period   immediately
      following the Termination Date (the "Continuation Period"), the Company
      shall at its expense continue on behalf of the Executive and  Executive
      dependents and beneficiaries the  life insurance, disability,  medical,
      dental and  hospitalization  benefits  provided (A)  to  the  Executive
      immediately prior  to  the  Notice  of  Termination  or  (B)  to  other
      similarly situated executives who continue in the employ of the Company
      during  the  Continuation  Period.    Notwithstanding  the  immediately
      preceding sentence, the  coverage and  benefits (including  deductibles
      and costs) provided  in this  Section 9(d)(3)  during the  Continuation
      Period shall  be  no less  favorable  to the  Executive  and  Executive
      dependents and beneficiaries, than the coverages and benefits in effect
      as of the Termination  Date.  The  Company's obligation hereunder  with
      respect to  the foregoing  benefits shall  terminate in  the event  the
      Executive obtains any such benefits (regardless  of level and scope  of
      coverage) pursuant  to a  subsequent employer's  benefit plans.    This
      Section 9(d)(3) shall not  be interpreted as to  limit any benefits  to
      which the  Executive,  Executive  dependents or  beneficiaries  may  be
      entitled under any of the Company's employee benefit plans, programs or
      practices  following   the  Executive's   termination  of   employment,
      including  without  limitation,  retiree  medical  and  life  insurance
      benefits,

      (4)            any  outstanding  stock  options  (including  restricted
      stock and granted performance shares or units) granted to the Executive
      under any  stock option  plans or  under any  other incentive  plan  or
      arrangement shall become  vested for an  additional twelve (12)  months
      after the Termination Date, and

      (5)            the Company shall reimburse  to the Executive the  costs
      of any outplacement  services incurred by  Executive, up  to a  maximum
      amount of Fifteen Thousand Dollars ($15,000.00).

      (e)       The amounts provided for  in Sections 9(a), 9(b)(2),  9(c)(2)
 and 9(d)(1) shall  be paid  within thirty  (30) days  after the  Executive's
 Termination Date.   Expenses  incurred by  Executive under  Section  9(d)(5)
 shall be paid within  thirty (30) days of  the receipt by  the Company of  a
 claim for reimbursement submitted by the Executive.

      (f)       The Executive hereby  acknowledges that  full payment  and/or
 performance by the Company of its obligations as set forth in Sections 9(a),
 (b), (c) or  (d) hereof shall  be in lieu  of any other  remedy or cause  of
 action the Executive may have, either  at law or in  equity, as a result  of
 the termination of the Executive's employment pursuant to such Sections.

 10.  Definitions.

      (a)       Notice of Termination.   For  purposes of  this Agreement,  a
 "Notice of Termination"  shall mean a  notice which  indicates the  specific
 termination provision in this Agreement, if  any, relied upon and shall  set
 forth in reasonable detail the facts and circumstances claimed to provide  a
 basis for termination of the Executive's  employment under the provision  so
 indicated.  Any  purported termination by  the Company or  by the  Executive
 shall be communicated by  written Notice of Termination  to the other.   For
 purposes of  this Agreement,  no such  purported termination  of  employment
 shall be effective without such Notice of Termination.

      (b)       Termination Date,  Etc.    For purposes  of  this  Agreement,
 "Termination Date"  shall  mean  in  the  case  of  the  Executive's  death,
 Executive's date of death, or in all other cases, the date specified in  the
 Notice of Termination subject to the following:

      (1)       If the Executive's  employment is terminated  by the  Company
      for Cause, the date of the Notice of Termination,

      (2)       If the Executive's  employment is terminated  by the  Company
      due to  Disability, the  date specified  in the  Notice of  Termination
      shall be  at  least  thirty (30)  days  from  the date  the  Notice  of
      Termination is  given to  the Executive,  provided that  the  Executive
      shall not have  returned to  the full-time  performance of  Executive's
      duties during such period for at least thirty (30) days, and

      (3)       If the Executive's employment is terminated for Good  Reason,
      the date specified in the Notice of Termination shall be not more  than
      thirty (30) days from  the date the Notice  of Termination is given  to
      the Company.

      (c)  Change In Control.  For purposes  of this Agreement, a "Change  in
      Control" shall mean any of the following events:

      (1)       An acquisition of any voting  securities of the Company  (the
      "Voting Securities") by any  "Person" (as the term  person is used  for
      purposes of Section 12(d)  or 13(d) of the  Securities Exchange Act  of
      1934,  as  amended  (the  "Exchange  Act"))  other  than  any   parent,
      subsidiary or affiliate  of the  Company immediately  after which  such
      Person has "Beneficial  Ownership" (within  the meaning  of Rule  13d-3
      promulgated under the Exchange Act) of more than fifty percent (50%) of
      the combined  voting power  of the  Company's then  outstanding  voting
      securities; provided,  however,  in  determining whether  a  Change  in
      Control has occurred, Voting  Securities which are  acquired in a  Non-
      Control Acquisition (as  hereinafter defined) shall  not constitute  an
      acquisition which  would cause  a Change  in Control.   A  "Non-Control
      Acquisition" shall mean an acquisition by (i) an employee benefit  plan
      (or a trust forming  a part thereof) maintained  by (A) the Company  or
      (B) any corporation or other Person  of which a majority of its  voting
      power or  its voting  equity securities  or equity  interest is  owned,
      directly  or  indirectly,  by  the   Company  (for  purposes  of   this
      definition, a "Subsidiary") or (ii) the Company or its Subsidiaries,

      (2)       The individuals  who, as  of the  date of  this Agreement  is
      approved by the Board, are members of the Board (the "Incumbent Board")
      cease for  any reason  to constitute  at least  one half  (1/2) of  the
      members of  the Board;  provided, however,  that  if the  election,  or
      nomination for election of any new  director was approved by a vote  of
      the members of the Board as provided by the Company's Bylaws, such  new
      director shall,  for purposes  of this  Agreement, be  considered as  a
      member of the  Incumbent Board; provided,  however, that no  individual
      shall be considered a member of the Incumbent Board if such  individual
      initially assumed office as a result of either an actual or  threatened
      "Election Contest" (as described in  Rule 14a-11 promulgated under  the
      Exchange Act) or other actual or threatened solicitation of proxies  or
      consents by or on  behalf of a  Person other than  the Board (a  "Proxy
      Contest") including by  reason of any  agreement intended  to avoid  or
      settle any Election Contest or Proxy Contest, or

      (3)       Approval by the stockholders of the Company of:

           (i)            A  complete  liquidation  or  dissolution  of   the
                Company, or

           (ii)           An agreement for the  sale or other disposition  of
                all or substantially all of the assets of the Company to  any
                Person (other than a transfer to a Subsidiary or a parent  in
                a Non-Control Acquisition).

 11.  Excise Tax Payments.

      In the  event of  a determination  that  a portion  of any  payment  or
 benefit to the Executive or for Executive's benefit payable or distributable
 pursuant to  the terms  of this  Agreement is  or will  be deemed  to be  an
 "excess parachute payment" within the meaning  of Section 280G(b)(1) of  the
 Internal Revenue Code of 1986, as amended, the Company shall be  responsible
 for the  payment  of  any  excise or  similar  tax  assessed  in  connection
 therewith.

 12.  Noncompetition.

      (a)       Except  with  the  prior  written  consent  of  the   Company
 authorized by a resolution  adopted by the Board,  for the period  beginning
 upon the date hereof and ending  on (i) in the  event of the termination  of
 the Executive's  employment by  the Executive  for Good  Reason pursuant  to
 Section 8(c)  or by  the Company  pursuant to  Section 8(d)  hereof and  the
 Executive is receiving payments from the Company pursuant to Section 9(b) or
 (d) hereof, the date on which the last such payment is received; or (ii)  in
 the event of the voluntary termination of the Executive's employment by  the
 Executive pursuant to Section 8(d) hereof or termination by the Company  for
 Cause, the  date  which  is  nine (9)  months  from  the  Termination  Date.
 Executive  shall  not  directly  or  indirectly  as  owner,  partner,  joint
 venturer,  stockholder,   employee,  broker,   agent,  principal,   trustee,
 corporate officer, director, licensor, or in any capacity whatsoever  engage
 in, become substantially financially interested in, employed by or have  any
 connection with,  any  business engaged  principally  in the  processing  of
 electronic hotel reservations  or travel  agent commissions  in any  country
 where the  Company  or any  of  its subsidiaries  is  then engaged  in  such
 business; provided, however, that  Executive may own  any securities of  any
 corporation which is engaged in such  business and is publicly traded  stock
 or securities of such corporation.

      (b)       Executive agrees that for a period of one (1) year  following
 termination of employment with the Company, Executive will not solicit or in
 any manner encourage employees of the Company, its subsidiaries or parent to
 leave its employ.

      (c)       In case one or more of the terms contained in Subsections (a)
 or (b) of this Section 12 shall  for any reason become invalid, illegal,  or
 unenforceable, such  invalidity, illegality  or unenforceability  shall  not
 affect any other terms  herein, but such  invalid, illegal or  unenforceable
 terms shall  be  deemed deleted  and  such  deletion shall  not  affect  the
 validity of the other  terms of this Section.   In addition,  if any one  or
 more of the terms contained in Subsections (a) or (b) of this Section  shall
 for any  reason  be  held to  be  excessively  broad with  regard  to  time,
 duration, geographic scope  or activity that  term shall be  construed in  a
 manner to enable it to be enforced to the extent compatible with  applicable
 law.

 13.  Successors and Assigns.

      (a)       This Agreement shall be binding upon  and shall inure to  the
 benefit of the  Company, its successors  and assigns and  the Company  shall
 require any successor  or assign to  expressly assume and  agree to  perform
 this Agreement in the same  manner and to the  same extent that the  Company
 would be required to perform if  no such succession or assignment had  taken
 place.  The term "Company" as used herein shall include such successors  and
 assigns.  The  term "successors  and assigns" as  used herein  shall mean  a
 corporation or other entity  acquiring all or  substantially all the  assets
 and business of the Company (including this Agreement) whether by  operation
 of law or otherwise.

      (b)       Neither this Agreement  nor any right  or interest  hereunder
 shall  be  assignable   or  transferable  by   the  Executive,   Executive's
 beneficiaries or legal  representatives, except by  will or by  the laws  of
 descent and distribution.  This Agreement shall inure to the benefit of  and
 be enforceable by the Executive's legal personal representative.

 14.  Fees and Expenses.

      The Company shall pay  all legal fees  and related expenses  (including
 the costs of experts, evidence and  counsel) incurred by the Executive as  a
 result of the breach or default by the Company of the terms hereof.

 15.  Notice.

      For purposes of  this Agreement,  notice and  all other  communications
 provided for in the Agreement (including the Notice of Termination) shall be
 in writing  and shall  be deemed  to have  been duly  given when  personally
 delivered or  sent  by certified  mail,  return receipt  requested,  postage
 prepaid, addressed to the respective addresses  last given by each party  to
 the other, provided that all notices to the Company shall be directed to the
 attention of the Board  with a copy to  the Secretary of  the Company.   All
 notices and communications  shall be  deemed to  have been  received on  the
 earlier of the date of delivery thereof  or on the third (3rd) business  day
 after the mailing thereof, except that notice of change of address shall  be
 effective only upon receipt.

 16.  Non-exclusivity of Rights.

      Nothing in  this  Agreement  shall prevent  or  limit  the  Executive's
 continuing or future participation in any benefit, bonus, incentive or other
 plan or program provided by the Company  or any of its subsidiaries and  for
 which the Executive may qualify, nor  shall anything herein limit or  reduce
 such rights as the  Executive may have under  any other agreements with  the
 Company or any of  its subsidiaries.  Amounts  which are vested benefits  or
 which the  Executive is  otherwise entitled  to receive  under any  plan  or
 program of  the Company  or any  of  its subsidiaries  shall be  payable  in
 accordance with such plan or program, except as explicitly modified by  this
 Agreement.

 17.  Settlement of Claims.

      The Company's  obligation to  make the  payments provided  for in  this
 Agreement and otherwise to  perform its obligations  hereunder shall not  be
 affected by any  circumstances, including, without  limitation, any  set-off
 (except against amounts  actually owed by  the Executive to  the Company  as
 evidenced  by  promissory  notes,  loan  agreements  and  similar  documents
 executed by the Executive), counterclaim, defense, recoupment or other right
 which the Company may have against the Executive or others.

 18.  Miscellaneous.

      No provision of this  Agreement may be  modified, waived or  discharged
 unless such waiver, modification  or discharge is agreed  to in writing  and
 signed by the Executive and the Company.   No waiver by either party  hereto
 at any time of any breach by the other party hereto of, or compliance  with,
 any condition or provision of this  Agreement to be performed by such  other
 party shall  be deemed  a  waiver of  similar  or dissimilar  provisions  or
 conditions at the same or at any prior or subsequent time.  No agreements or
 representations, oral or otherwise, express or implied, with respect to  the
 subject matter hereof have been made by either party which are not expressly
 set forth in this Agreement.

 19.  Governing Law.

      This Agreement  shall be  governed by  and  construed and  enforced  in
 accordance with the laws of the State of Texas without giving effect to  the
 conflict of  law  principles  thereof.    Subject  to  Section  22  of  this
 Agreement, any  action brought  by  any party  to  this Agreement  shall  be
 brought and  maintained  in a  court  of competent  jurisdiction  in  Dallas
 County, Texas.

 20.  Severability.

      The provisions  of this  Agreement shall  be deemed  severable and  the
 invalidity or unenforceability of any provisions hereof shall not affect the
 validity or enforceability of the other provisions hereof.

 21.  Entire Agreement.

      This Agreement  constitutes the  entire agreement  between the  parties
 hereto and  supersedes  all prior  agreements,  if any,  understandings  and
 arrangements, oral or written,  between the parties  hereto with respect  to
 the subject matter hereof.

 22.  Arbitration.

      Any dispute or controversy arising out of or relating to this Agreement
 shall be determined and settled by arbitration in the City of Dallas, Texas,
 in accordance with the Employment Dispute  Resolution Rules of the  American
 Arbitration Association  then  in  effect,  and  judgement  upon  the  award
 rendered by  the  arbitrator  may  be entered  in  any  court  of  competent
 jurisdiction.  Such  arbitrator shall  have no power  to modify  any of  the
 provisions of  this  Agreement,  and his  or  her  jurisdiction  is  limited
 accordingly.  A party requesting arbitration  hereunder shall give ten  (10)
 days' written notice to the other party to request such arbitration.  Unless
 the  arbitrator  decides  otherwise,  the  successful  party  in  any   such
 arbitration shall  be  entitled  to reasonable  attorneys'  fees  and  costs
 associated with such arbitration.  If  the parties hereto cannot agree  upon
 an arbitrator, then one  shall be appointed by  the governing office of  the
 American Arbitration Association.   Any arbitrator  so appointed shall  have
 extensive experience in a  profession connected with  the subject matter  of
 the dispute.    Whenever any  action  is required  to  be taken  under  this
 Agreement within a specified period of time and the taking of such action is
 materially affected by a matter submitted to arbitration, such period  shall
 automatically be extended by the number of days plus ten (10) that are taken
 for the determination of that matter by the arbitrator.

      IN WITNESS  WHEREOF,  the  Company has  caused  this  Agreement  to  be
 executed by  its Chairman  of  the Board  or  Chairman of  the  Compensation
 Committee.

 PEGASUS SOLUTIONS, INC.            EXECUTIVE:


 By:  _____________________________      By:  _____________________________
                                         Susan Cole
 Print: ___________________________

 Title: ___________________________