<PAGE>
                                                                   EXHIBIT 10.14

                             PEGASUS SOLUTIONS, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                   AMENDED AND RESTATED EFFECTIVE JULY 1, 2002


<PAGE>


                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                PAGE
                                                                                                ----
<S>                                                                                             <C>
ARTICLE I     ESTABLISHMENT AND PURPOSE ......................................................    1

     1.1      Establishment ..................................................................    1
     1.2      Purpose ........................................................................    1

ARTICLE II    DEFINITIONS AND CONSTRUCTION ...................................................    1

     2.1      Definitions ....................................................................    1
     2.2      Construction ...................................................................    8

ARTICLE III   PARTICIPATION ..................................................................    8

     3.1      Selection of Participants ......................................................    8

ARTICLE IV    BENEFITS .......................................................................    8

     4.1      Eligibility for Benefits .......................................................    8
     4.2      Amount of Benefits .............................................................    9
     4.3      Form of Payment ................................................................    9
     4.4      Optional Forms of Payment ......................................................    9
     4.5      Termination of Employment for Good Reason following a Change of Control ........   10

ARTICLE V     FUNDING AND OTHER MATTERS ......................................................   10

     5.1      No Trust Required ..............................................................   10
     5.2      Funding of Obligation ..........................................................   11
     5.3      Continued Employment ...........................................................   11
     5.4      Restriction on Assignment ......................................................   11
     5.5      Binding on Company, Participants and Their Successors ..........................   11
     5.6      Governing Law ..................................................................   11
     5.7      Severability ...................................................................   11

ARTICLE VI    ADMINISTRATION .................................................................   11

     6.1      Administration .................................................................   11
     6.2      Finality of Determination ......................................................   12
     6.3      Expenses .......................................................................   12
     6.4      Indemnification and Exculpation ................................................   12
     6.5      Claims Procedure ...............................................................   12

ARTICLE VII   AMENDMENT AND TERMINATION ......................................................   13

     7.1      Amendment and Termination ......................................................   13
</Table>

                                       i
<PAGE>


                             PEGASUS SOLUTIONS, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                   ARTICLE I

                            ESTABLISHMENT AND PURPOSE

         1.1 Establishment. Pegasus Systems, Inc. established the PEGASUS
SYSTEMS, INC. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (the "Plan"), effective as
of January 1, 2000. Thereafter, Pegasus Systems, Inc. changed its name to
Pegasus Solutions, Inc. (the "Company"). The name of the Plan is hereby changed
to the PEGASUS SOLUTIONS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN, and the
Plan is amended and restated effective as of July 1, 2002 (the "Effective
Date").

         1.2 Purpose. The purpose of the Plan is to promote in a select group of
its management or highly compensated employees and those of its affiliates the
strongest interest in the successful operation of the business and increased
efficiency in their work, to align the financial interests of such employees
with those of Company shareholders, to ensure competitive pay and benefits for
those individuals and to provide an opportunity for accumulation of funds for
their retirement. It is intended that the Plan be "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and not be
construed to provide income to any participant or beneficiary under the Internal
Revenue Code of 1986, as amended (the "Code") prior to actual receipt of
benefits hereunder.

                                   ARTICLE II

                          DEFINITIONS AND CONSTRUCTION

         2.1 Definitions. The following words and phrases shall have the meaning
set forth below unless a different meaning is plainly required by the context:

                  (a)      The term "ACCRUED BENEFIT" shall mean a Participant's
                           monthly retirement benefit equal to the greater of:

                           (i)      three percent (3%) of the Participant's
                                    Monthly Target Total Cash Compensation as of
                                    July 1, 2002 multiplied by the Participant's
                                    Years of Service as of July 1, 2002,
                                    increased by five percent (5%) compounded
                                    annually until the Participant's
                                    Determination Date, but not to exceed sixty
                                    percent (60%) of the greater of (A) the
                                    Participant's Monthly Target Total Cash
                                    Compensation as of July 1, 2002 or (B) the
                                    Participant's Final Average Compensation;
                                    provided that the maximum benefit for the
                                    Chief Executive Officer of the Company is
                                    seventy percent (70%) of the greater of (A)
                                    or (B); or


                                       1
<PAGE>


                           (ii)     one-half percent (1/2%) of the Participant's
                                    Final Average Compensation multiplied by
                                    Years of Service.

                  (b)      The term "ACTUARIALLY EQUIVALENT" shall mean a
                           benefit differing in time, period, and/or manner of
                           payment from a specified benefit provided under this
                           Plan, but having the same value at the date of
                           commencement of benefits when computed using the 1994
                           GAM Static Male Table and an interest rate equal to
                           the annual rate of interest on 30-year Treasury
                           securities in effect for the second calendar month
                           preceding the Plan Year of the distribution.

                  (c)      The term "ADMINISTRATIVE COMMITTEE" shall mean the
                           Compensation and Benefits Administrative Committee of
                           the Company; provided, however, that during any
                           period the Compensation and Benefits Administrative
                           Committee is not constituted, the term shall mean the
                           Compensation Committee.

                  (d)      The term "BENEFICIARY" shall mean the person or
                           persons designated by a Participant to receive
                           payment of all or a designated portion of the
                           Participant's benefit payable under this Plan in the
                           event of the Participant's death. Each Beneficiary
                           designation shall be in the form prescribed by the
                           Administrative Committee and will be effective only
                           when filed with the Administrative Committee during
                           the Participant's or former Participant's lifetime.
                           Each Beneficiary designation filed with the
                           Administrative Committee will cancel all Beneficiary
                           designations previously filed with the Administrative
                           Committee. If any Participant or former Participant
                           fails to designate a Beneficiary in the manner
                           provided above; or if the Beneficiary designated by a
                           Participant or former Participant dies before him and
                           the Participant or former Participant fails to
                           designate a new Beneficiary, or if the Beneficiary
                           designated by a deceased Participant or former
                           Participant dies before complete distribution of the
                           deceased Participant's or former Participant's
                           benefit, the Administrative Committee shall direct
                           that such Participant's or former Participant's
                           benefit be paid:

                           (i)      To the surviving spouse of such Participant
                                    or former Participant;

                           (ii)     To the surviving children, and the
                                    descendants of any deceased child, per
                                    stirpes, of the Participant or former
                                    Participant;

                           (iii)    To the Participant's surviving brothers and
                                    sisters; or

                           (iv)     To the Participant's estate (executor or
                                    administrator).

                           In the event of the Participant's death, the Company
                           shall make benefit payments payable under this Plan
                           to the Participant's Beneficiary. Any payment made by
                           the Company to the Participant's Beneficiary in good
                           faith shall fully discharge the Company from its
                           obligations with respect

                                       2
<PAGE>


                           to such payment, and the Company shall have no
                           further obligation to see to the application of any
                           money so paid.

                  (e)      The term "BENEFIT COMMENCEMENT DATE" shall mean the
                           first day a benefit is paid to a Participant under
                           this Plan.

                  (f)      The term "BOARD" shall mean the Board of Directors of
                           the Company.

                  (g)      The term "CAUSE" shall mean a Participant's
                           termination of employment due to:

                           (i)      His conviction or plea of guilty or no
                                    contest to a felony involving fraud or
                                    embezzlement with respect to his employment
                                    with the Company; or

                           (ii)     His violation of any non-competition or
                                    non-disclosure agreement with the Company,
                                    or his conviction or plea of guilty or no
                                    contest to an intentional and willful
                                    violation of federal securities laws
                                    involving his duties at the Company or
                                    Company securities.

                           Notwithstanding the preceding sentence, the
                           Compensation Committee may, in its discretion,
                           determine that a termination of employment following
                           an event described above shall not be deemed for
                           "Cause."

                  (h)      The term "CHANGE OF CONTROL" shall mean the
                           occurrence of any one of the following events:

                           (i)      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 of
                                    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 of Control. A "Non-Control
                                    Acquisition" shall mean an acquisition by
                                    (A) an employee benefit plan (or a trust
                                    forming a part thereof) maintained by (1)
                                    the Company or (2) 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 (B) the
                                    Company or its Subsidiaries;


                                       3
<PAGE>


                           (ii)     The individuals who, as of the effective
                                    date of the amendment and restatement of the
                                    Plan, 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

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

                           (iv)     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).

                  (i)      The term "CODE" shall mean the Internal Revenue Code
                           of 1986, as amended.

                  (j)      The term "COMPANY" shall mean Pegasus Solutions,
                           Inc., a Delaware Corporation, its corporate
                           successors, and the surviving entity resulting from
                           any merger of Pegasus Solutions, Inc. with any
                           corporation or other entity.

                  (k)      The term "COMPENSATION" shall mean the Participant's
                           earned income, salary, bonus and other remuneration
                           from the Employer, including Savings Contributions to
                           the Pegasus Solutions, Inc. Executive Deferred
                           Compensation Plan and contributions to the Pegasus
                           Solutions, Inc. 401(k) Savings Plan or a cafeteria
                           plan pursuant to section 125 of the Code, but
                           excluding amounts realized from the exercise of a
                           non-qualified stock option or when restricted stock
                           or property held by the Participant either becomes
                           freely transferable or is no longer subject to a
                           substantial risk of forfeiture under section 83 of
                           the Code, "gross-up" payments of any kind,
                           reimbursements or other expense allowances, and
                           moving expenses, as determined in the discretion of
                           the Compensation Committee. Notwithstanding the
                           foregoing, Compensation shall also include severance
                           pay under the terms of an Employment Agreement during
                           the period described thereunder.


                                       4
<PAGE>


                  (l)      The term "COMPENSATION COMMITTEE" shall mean the
                           Compensation Committee of the Board; provided
                           however, that during any period the Compensation
                           Committee is not constituted, the term shall mean the
                           Board.

                  (m)      The term "DATE OF PARTICIPATION" shall mean the date
                           the Compensation Committee specifies as the first day
                           an Employee commences participation in the Plan.

                  (n)      The term "DETERMINATION DATE" shall mean the date on
                           which a Participant ceases to be an Employee for any
                           reason or, if a Participant's Employment Agreement
                           entitles him or her to continued benefits under the
                           Plan after termination of employment, the last day of
                           the month in which his or her continued benefits
                           cease.

                  (o)      The term "EARLY RETIREMENT" shall mean the
                           termination of the Participant's status as an
                           Employee after the Participant attains age fifty
                           (50), provided such termination is approved by the
                           Compensation Committee as a "retirement" for purposes
                           of this Plan.

                  (p)      The term "EMPLOYEE" shall mean an individual on the
                           payroll of an Employer whose wages from the Employer
                           are subject to withholding for purposes of Federal
                           income taxes and for purposes of the Federal
                           Insurance Contributions Act or any individual
                           designated by the Compensation Committee as an
                           Employee for purposes of the Plan.

                  (q)      The term "EMPLOYER" shall mean Pegasus Solutions,
                           Inc. and any other affiliate of the Company which
                           employs a Participant.

                  (r)      The term "EMPLOYMENT AGREEMENT" shall mean a written
                           employment agreement in effect between the Company
                           and a Participant.

                  (s)      The term "FINAL AVERAGE COMPENSATION" shall mean the
                           highest average monthly Compensation received by the
                           Participant from the Employer during any period of
                           thirty-six (36) consecutive calendar months within
                           the period of one hundred and twenty (120)
                           consecutive calendar months ending on the
                           Participant's Determination Date. If the Participant
                           is an Employee of the Employer for less than
                           thirty-six (36) consecutive calendar months, the
                           Participant's Final Average Compensation shall be the
                           average monthly Compensation received by the
                           Participant from the Employer during the
                           Participant's period as an Employee ending on the
                           Participant's Determination Date.

                  (t)      The term "GOOD REASON" means the occurrence of any of
                           the events or conditions described below:

                           (i)      Absent the Participant's consent, if the
                                    Participant shall cease to maintain his or
                                    her position specified in the Employment

                                       5
<PAGE>


                                    Agreement with the Company (or any successor
                                    or parent thereof) or upon the assignment to
                                    the Participant of any material duties or
                                    responsibilities which are inconsistent with
                                    his position or responsibilities; or any
                                    removal of the Participant from or failure
                                    to reappoint or reelect him to any such
                                    offices or positions, except during a period
                                    of Total and Permanent Disability or in
                                    connection with the termination of his
                                    employment for Total and Permanent
                                    Disability, Cause, as a result of his death,
                                    or by the Participant other than for Good
                                    Reason;

                           (ii)     Absent the Participant's consent, a
                                    reduction in the Participant's base salary
                                    or any failure to pay the Participant any
                                    compensation or benefits to which he is
                                    entitled within thirty (30) days of the due
                                    date;

                           (iii)    A Change of Control;

                           (iv)     Any material breach by the Company of any
                                    provision of the Participant's Employment
                                    Agreement; provided, however, the
                                    Participant 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
                                    Participant'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 the
                                    Participant's Employment Agreement; or

                           (vi)     The failure of the Company to obtain an
                                    agreement, reasonably satisfactory to the
                                    Participant, from any successor or assign of
                                    the Company to assume and agree to perform
                                    the Participant's Employment Agreement, as
                                    contemplated thereunder.

                           The Participant's right to terminate his employment
                           for Good Reason shall not be affected by his
                           incapacity due to physical or mental illness.

                  (u)      The term "MONTHLY TARGET TOTAL CASH COMPENSATION"
                           shall mean one-twelfth (1/12) of the sum of a
                           Participant's annual base salary and annual target
                           bonus as approved by the Compensation Committee.

                  (v)      The terms "NORMAL RETIREMENT" and "LATE RETIREMENT"
                           shall each mean the termination of the Participant's
                           status as an Employee after the Participant attains
                           age sixty (60).

                  (w)      The term "PARTICIPANT" shall mean an Employee who is
                           selected to participate in the Plan pursuant to
                           Article III.


                                       6
<PAGE>


                  (x)      The term "PLAN" shall mean the Pegasus Solutions,
                           Inc. Supplemental Executive Retirement Plan as set
                           forth herein, as amended from time to time in
                           accordance with the Participants' consent as set
                           forth in Article VII.

                  (y)      The term "PLAN YEAR" shall mean the 12-month period
                           beginning on each January 1st and ending on the
                           subsequent December 31st.

                  (z)      The term "TOTAL AND PERMANENT DISABILITY" shall mean:

                           (i)      A mental or physical disability, either
                                    occupational or non-occupational in cause,
                                    which satisfies the definition of
                                    "Disability" (or any corresponding term) as
                                    set forth in an Employment Agreement; or

                           (ii)     If there is no Employment Agreement or if
                                    the Employment Agreement then in effect has
                                    no such defined term or concept, a mental or
                                    physical disability, either occupational or
                                    non-occupational in cause, which satisfies
                                    the definition of "total and permanent
                                    disability" (or any corresponding term) as
                                    set forth in the principal long-term
                                    disability policy or plan provided by the
                                    Company then covering the Participant; or

                           (iii)    If there is no such policy then covering the
                                    Participant, a mental or physical disability
                                    which, as determined by the Administrative
                                    Committee in good faith upon receipt of and
                                    in reliance on sufficient competent medical
                                    advice from one or more individuals selected
                                    by the Administrative Committee who are
                                    qualified to give professional medical
                                    advice, impairs or is expected to impair the
                                    Participant's ability to substantially
                                    perform the Participant's duties as an
                                    Employee of the Company for a period of at
                                    least ninety (90) consecutive days.

                  (aa)     The term "YEARS OF PARTICIPATION" shall mean the
                           period of time, computed to the nearest completed
                           month, commencing on the Participant's Date of
                           Participation in the Plan and ending on the
                           Participant's Determination Date. Notwithstanding the
                           preceding sentence, the Compensation Committee may,
                           in its discretion, credit a Participant with
                           additional full or partial Years of Participation.

                  (bb)     The term "YEARS OF SERVICE" shall mean the period of
                           time, computed to the nearest completed month,
                           commencing on the Participant's date of hire as an
                           Employee of the Employer and ending on the
                           Participant's Determination Date. Notwithstanding the
                           preceding sentence, the Compensation Committee may,
                           in its discretion, credit a Participant with
                           additional full or partial Years of Service.


                                       7
<PAGE>


         2.2 Construction. Except when otherwise indicated by the context, the
masculine shall also include the feminine gender and the singular shall also
mean the plural.

                                   ARTICLE III

                                  PARTICIPATION

         3.1 Selection of Participants. Participation in the Plan shall be
limited to those select management Employees of the Employer who are designated
as Participants by the Compensation Committee. No person shall have an automatic
right to be selected as a Participant. Notwithstanding the foregoing, a
Participant shall continue to participate in the Plan pursuant to the terms of
an Employment Agreement, where applicable.

                                   ARTICLE IV

                                    BENEFITS

         4.1 Eligibility for Benefits. A Participant shall be eligible for a
benefit determined in accordance with the provisions of Section 4.2 if the
Participant's Determination Date occurs due to one of the following reasons:

                  (a)      Normal Retirement or Late Retirement;

                  (b)      Early Retirement;

                  (c)      Death;

                  (d)      Total and Permanent Disability;

                  (e)      Termination of employment with the Employer for Good
                           Reason following a Change of Control;

                  (f)      Termination of employment after completion of four
                           (4) Years of Participation (i) by the Employer for
                           any reason other than Cause or (ii) by the
                           Participant; or

                  (g)      If a Participant's Employment Agreement provides that
                           the Participant shall be deemed to have satisfied the
                           requirements for eligibility for benefits under the
                           Plan if his or her employment is terminated by the
                           Company without Cause, or by the Participant for Good
                           Reason, the Determination Date following termination
                           by the Company without Cause, as defined in the Plan,
                           or by the Participant with Good Reason.


                                       8
<PAGE>

         4.2 Amount of Benefits. The benefit payable to the Participant or the
Participant's Beneficiary under the Plan pursuant to Section 4.1 shall be
determined as follows:

                  (a)      Normal Retirement or Late Retirement. A monthly
                           benefit equal to the Participant's Accrued Benefit,
                           commencing on the first day of the month following
                           the Participant's Determination Date.

                  (b)      Early Retirement. A monthly benefit equal to the
                           Participant's Accrued Benefit commencing on the first
                           day of the month coinciding with or next following
                           the Participant's sixtieth (60th) birthday.
                           Alternatively, the Participant may, no later than six
                           (6) months prior to the Participant's Determination
                           Date, elect to receive reduced monthly payments
                           commencing on the first day of any month after the
                           Participant's Determination Date. The reduced benefit
                           is equal to the Participant's Accrued Benefit reduced
                           by four percent (4%) for each year (pro-rated for
                           partial years) between the date of the Participant's
                           first benefit payment and the first month coinciding
                           with or next following the Participant's sixtieth
                           (60th) birthday.

                  (c)      Death. A single lump-sum payment that is Actuarially
                           Equivalent to the Participant's Accrued Benefit at
                           the Participant's death, payable to the Participant's
                           Beneficiary as soon as practicable following such
                           death.

                  (d)      Total and Permanent Disability. A monthly benefit
                           commencing on the first day of the month coinciding
                           with or next following the Participant's sixtieth
                           (60th) birthday. The amount of the benefit is the
                           Participant's Accrued Benefit determined using the
                           Years of Service the Participant would have at age
                           sixty (60) and the Participant's Final Average
                           Compensation at the time of the Participant's
                           termination as an Employee for Total and Permanent
                           Disability. Such benefit shall be reduced by any
                           benefit the Participant receives from the long-term
                           disability plan provided by the Company.

                  (e)      Termination. A monthly benefit equal to the
                           Participant's Accrued Benefit commencing on the first
                           day of the month coinciding with or next following
                           the Participant's sixtieth (60th) birthday.

         4.3 Form of Payment. Except as otherwise specifically provided, payment
of benefits from this Plan, if any, shall be payable as a single life annuity
during the Participant's lifetime with the last payment to be made for the month
in which the Participant's death occurs.

         4.4 Optional Forms of Payment. In lieu of the form and amount of
benefit payable under Section 4.3, a Participant may, no later than twelve (12)
months prior to the date benefits commence, elect a benefit of Actuarially
Equivalent value to the Accrued Benefit payment specified in Section 4.3 in one
of the following forms:

                  (a)      Monthly payments to the Participant during the
                           Participant's life and, if the Participant is
                           survived by a Beneficiary, continuing monthly
                           payments


                                       9
<PAGE>


                           in the amount of fifty percent (50%) or one hundred
                           percent (100%) of the amount payable to the
                           Participant to such Beneficiary for the Beneficiary's
                           lifetime;

                  (b)      Monthly payments to the Participant during the
                           Participant's life and, if the Participant dies
                           within one hundred twenty (120) months of the date
                           the Participant's benefits commenced, continuing
                           monthly payments of the same amount to the
                           Participant's Beneficiary for the balance of such one
                           hundred twenty (120) month period;

                  (c)      Monthly payments to the Participant or the
                           Participant's Beneficiary for a period of one hundred
                           twenty (120) months; or

                  (d)      A partial or full lump-sum payment, in the discretion
                           of the Compensation Committee.

         4.5 Distributions Following a Change of Control. Notwithstanding the
foregoing:

                  (a)      A Participant shall receive an immediate lump-sum
                           distribution of his Accrued Benefit if his
                           Determination Date follows termination of employment
                           with the Employer within twelve (12) months following
                           a Change of Control.

                  (b)      A Participant may elect, within twelve (12) months
                           following a Change of Control, to receive an
                           in-service distribution of his Accrued Benefit in a
                           lump sum, provided that such Participant must agree
                           irrevocably that he or she shall no longer
                           participate in the Plan. The Company's actuaries
                           shall provide the calculation of such Actuarially
                           Equivalent lump sum amount based on the actuarial
                           assumptions in the Plan. This election must be in
                           writing, and will be effective as soon as
                           administratively feasible following the date the
                           election is received by the Company, but in no event
                           later than thirty (30) days following the date the
                           election is received by the Company.

                                   ARTICLE V

                            FUNDING AND OTHER MATTERS

         5.1 No Trust Required.

         The adoption of this Plan and any setting aside of amounts by the
Employer with which to discharge its obligations hereunder shall not be deemed
to create a trust; legal and equitable title to any funds so set aside shall
remain in the Employer, and any recipient of benefits hereunder shall have no
security or other interest in such funds. Any and all funds so set aside shall
remain subject to the claims of the general creditors of the Employer. This
provision shall not require the Employer to set aside any funds, but the
Employer may set aside such funds if it chooses to do so.


                                       10
<PAGE>


         5.2 Funding of Obligation. Section 5.1 above to the contrary
notwithstanding, the Employer may elect to transfer assets to a trust, the
provisions of which may require the use of the trust's assets to satisfy claims
of an Employer's general unsecured creditors in the event of such Employer's
insolvency and direct that no Participant shall at any time have a prior claim
to such assets. The assets of the trust shall not be deemed to be assets of this
Plan. Upon a Change of Control, the Committee shall transfer assets to the trust
sufficient to pay for any benefits accrued under the Plan as of the date of such
action for Participants who are or have been employed by the Employer, where
such accrued benefits shall be the actuarially determined benefits as of such
Change of Control.

         5.3 Continued Employment. Nothing contained in the Plan shall be
construed as conferring upon the Participant the right to continue in the
employment of the Employer in any capacity or as otherwise affecting the
employment relationship.

         5.4 Restriction on Assignment. The benefits provided hereunder are
intended for the personal security of persons entitled to payment under the Plan
and are not subject in any manner to the debts or other obligations of the
persons to whom they are payable. The interest of any Participant or his
Beneficiary may not be sold, transferred, assigned, or encumbered in any manner,
either voluntarily or involuntarily, and any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge the same shall be null and
void; neither shall the benefits hereunder be liable for or subject to the
debts, contracts, liabilities, engagements, or torts of any person to whom such
benefits or funds are payable, nor shall they be subject to garnishment,
attachment, or other legal equitable process nor shall they be an asset in
bankruptcy.

         5.5 Binding on Company, Participants and Their Successors. The Plan
shall be binding upon the parties hereto, the successors and assigns of the
Company and the heirs, executors and administrators of the Participants.

         5.6 Governing Law. THE PLAN SHALL BE CONSTRUED AND ENFORCED UNDER THE
LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.

         5.7 Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not affect
the remaining parts of the Plan, but the Plan shall be construed and enforced as
if the illegal or invalid provision had never been inserted.

                                   ARTICLE VI

                                 ADMINISTRATION

         6.1 Administration. The Administrative Committee shall be responsible
for the general administration of the Plan. The Administrative Committee and/or
the Compensation Committee shall have the authority to make rules to administer
and interpret the Plan, to decide questions arising under the Plan, and to take
such other action as may be appropriate to carry out the purposes of the Plan.


                                       11
<PAGE>

         6.2 Finality of Determination. The determination of the Administrative
Committee and/or the Compensation Committee as to any disputed questions arising
under the Plan, including questions of construction and interpretation shall be
final, binding, and conclusive upon all persons with respect to each
determination assigned to either the Administrative Committee or the
Compensation Committee. These determinations include, but are not limited to,
the Compensation Committee's determinations as to which Employees shall be
Participants and the Administrative Committee's determinations regarding the
specific benefits which shall be paid to or on behalf of each such Participant.

         6.3 Expenses. The expenses of administering the Plan shall be borne by
the Company.

         6.4 Indemnification and Exculpation. The members of the Compensation
Committee, the Board, the Administrative Committee and the officers, directors,
and employees of the Company shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by them in connection with or resulting
from any claim, action, suit, or proceeding to which they may be a party or in
which they may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by them in settlement
(with the Company's written approval) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding. The foregoing provision shall
not be applicable to any person if the loss, cost, liability, or expense is due
to such person's fraud or willful misconduct.

         6.5 Claims Procedure. If any person (hereinafter called the "Claimant")
feels that he is being denied a benefit to which he is entitled under this Plan,
such Claimant may file a written claim for said benefit with the Administrative
Committee. Within ninety (90) days following the receipt of such claim the
Administrative Committee shall determine and notify the Claimant as to whether
he is entitled to such benefit. If an extension of time is required to process
the claim, this time period may be extended an additional ninety (90) days. If
the claim requires the Administrative Committee to make a determination of Total
and Permanent Disability, the time period in which the Administrative Committee
will review the claim is forty-five (45) days, with two possible extensions of
thirty (30) days each. In all cases, the Claimant will be notified in writing of
an extension and the reasons for the extension. If the claim is denied, the
written notice of denial to the Claimant will include the specific reasons for
the denial, references to the provisions of the Plan supporting the denial, a
description of any additional information necessary for the claim to be granted,
a description of the Plan's claims review procedures, and a statement regarding
the Claimant's legal rights to challenge a denial of his or her claim following
appeal.

If the Claimant still feels that he has a claim, the Claimant may file an appeal
with the Administrative Committee in writing within sixty (60) days of receiving
the notice of denial. If the Claimant requires the Administrative Committee to
make a determination of Total and Permanent Disability, the Claimant may file an
appeal with the Administrative Committee in writing within one hundred eighty
(180) days of receiving the notice of denial. The Claimant may submit documents,
records, and other information related to his or her appeal. Upon request, the
Claimant may review information relevant to the benefit claim or the
Administrative Committee will provide the Claimant with copies of information
relevant to the benefit claim without charge. Final determination on the claim
will be made no later than sixty (60) days after


                                       12
<PAGE>


the Administrative Committee's receipt of the Claimant's written request for an
appeal. If additional time is required for processing the Claimant's appeal,
this time period may be extended an additional sixty (60) days. If the claim
requires the Administrative Committee to make a determination of Total and
Permanent Disability, a final determination will be made within forty-five (45)
days of the Claimant's request for an appeal. If additional time is required for
processing the appeal, this time period may be extended an additional forty-five
(45) days. In all cases, the Claimant will be notified of an extension and the
reasons for the extension. If the Claimant's appeal is denied, the written
notice of denial will include the specific reasons for the denial, references to
the provisions of the Plan supporting the denial, and a statement regarding the
Claimant's legal rights to challenge the denial of the claim. Upon request, the
Claimant may review information relevant to the benefit claim or the
Administrative Committee will provide the Claimant with copies of information
relevant to the benefit claim without charge. The final decision of the
Administrative Committee shall be conclusive and binding upon all parties having
or claiming to have an interest in the matter being reviewed.

                                  ARTICLE VII

                            AMENDMENT AND TERMINATION

         7.1 Amendment and Termination. The Board may at any time amend or
terminate the Plan, provided that a Participant shall not be subject to any such
amendment or termination without his or her written consent. If the Plan should
be amended or terminated, the Company shall be liable for any benefits accrued
under the Plan as of the date of such action.

         IN TESTIMONY WHEREOF, PEGASUS SOLUTIONS, INC. has caused this
instrument to be executed in its name and on its behalf, by the officer
thereunto duly authorized this 28th day of February, 2003, effective as of
July 1, 2002.

                                   PEGASUS SOLUTIONS, INC.

                                   By:
                                      --------------------

                                   Title:
                                         -----------------



Attest:
       -----------------


                                       13