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EXHIBIT 4.1


EXECUTION COPY




AGREEMENT OF SUBSTITUTION AND

AMENDMENT NO. 1 TO RIGHTS AGREEMENT




     AGREEMENT
OF SUBSTITUTION AND AMENDMENT NO. 1 TO RIGHTS AGREEMENT, dated as of
December 19, 2005 (this “Rights Agreement Amendment”), between Pegasus Solutions, Inc., a Delaware
corporation (the “Company”), and American Stock Transfer & Trust Company, a New York
banking corporation (“AST”).



     WHEREAS, the Company entered into a Rights Agreement, dated as of September 28, 1998 (the
“Rights Agreement”) with American Securities Transfer & Trust, Inc. (the “Predecessor
Agent”) as rights agent; and



     WHEREAS, the Company wishes to remove the Predecessor Agent and substitute AST as rights agent
pursuant to Section 21 of the Rights Agreement; and



     WHEREAS, the Company has given the Predecessor Agent notice of removal of the Predecessor
Agent as rights agent; and



     WHEREAS, concurrently herewith, the Company, Perseus Holding Corp., a Delaware corporation
(“Parent”), and 406 Acquisition Corp., a Delaware corporation (“Merger Sub”), are
entering into an Agreement and Plan of Merger of even date herewith (the “Merger
Agreement”), pursuant to which Merger Sub will merge with and into the Company (the
“Merger”); and



     WHEREAS, the Distribution Date (as defined in the Rights Agreement) has not occurred; and




     WHEREAS, Parent and Merger Sub are entering into the Merger Agreement in reliance on and in
consideration of the terms of this Rights Agreement Amendment; and



     WHEREAS, pursuant to Sections 27 and 29 of the Rights Agreement, the Board of Directors of the
Company has determined that an amendment to the Rights Agreement as set forth herein is necessary
and desirable in connection with the foregoing, and the Company has directed AST to evidence such
amendment in writing.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration, and intending to be legally bound hereby, the Company hereby
amends the Rights Agreement as follows:



1. Amendment of Section 1(a). Section 1(a) of the Rights Agreement is amended to add the following
sentence at the end thereof:




     “Notwithstanding anything in this Agreement to the contrary, neither Parent, Merger
Sub, nor any of their respective Affiliates shall be deemed to be an Acquiring Person solely
by virtue of (i) the approval, execution, delivery or performance of the



 









 






Merger Agreement or (ii) the consummation of the Merger or any of the other
transactions contemplated by and pursuant to the Merger Agreement.”


2. Amendment of Section 1(u). Section 1(u) of the Rights Agreement is amended to add the following
sentence at the end thereof:





     “Notwithstanding anything in this Agreement to the contrary, a Flip-in Event shall not
be deemed to have occurred solely as the result of (i) the approval, execution, delivery or
performance of the Merger Agreement or (ii) the consummation of the Merger or any of the
other transactions contemplated by and pursuant to the Merger Agreement.”


3. Amendment of Section 1(w). Section 1(w) of the Rights Agreement is amended to add the following
sentence at the end thereof:





     “Notwithstanding anything in this Agreement to the contrary, a Flip-over Event shall
not be deemed to have occurred solely as the result of (i) the approval, execution, delivery
or performance of the Merger Agreement or (ii) the consummation of the Merger or any of the
other transactions contemplated by and pursuant to the Merger Agreement.”


4. Amendment of Section 1(mm). Section 1(mm) of the Rights Agreement is amended to add the
following sentence at the end thereof:





     “Notwithstanding anything in this Agreement to the contrary, a Stock Acquisition Date
shall not be deemed to have occurred solely as the result of (i) the approval, execution,
delivery or performance of the Merger Agreement, (ii) the consummation of the Merger or any
of the other transactions contemplated by and pursuant to the Merger Agreement, or (iii) the
public announcement of or filing of any report pursuant to Section 13(d) under the Exchange
Act in connection with the foregoing clause (i) or (ii).”


5. Amendment of Section 1. Section 1 of the Rights Agreement is amended to add the following at
the end thereof:





	 	(rr)	 	“Merger” shall mean the merger of the Company and Merger Sub
pursuant to the Merger Agreement.
	 
	 	(ss)	 	“Merger Agreement” shall mean that certain Agreement and Plan
of Merger, dated as of December 19, 2005, by and among the Company, Parent
and Merger Sub.
	 
	 	(tt)	 	“Merger Sub” shall mean 406 Acquisition Corp., a Delaware
corporation.
	 
	 	(uu)	 	“Parent” shall mean Perseus Holding Corp., a Delaware
corporation.





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6. Amendment of Section 3(a). Section 3(a) of the Rights Agreement is amended to add the following
sentence at the end thereof:





     “Notwithstanding anything in this Agreement to the contrary, a Distribution Date shall
not be deemed to have occurred solely as the result of (i) the approval, execution, delivery
or performance of the Merger Agreement or (ii) the consummation of the Merger or any of the
other transactions contemplated by and pursuant to the Merger Agreement.”


7. Amendment of Section 13. Section 13(d) of the Rights Agreement is amended to add the following
sentence at the end thereof:





     “The provisions of this Section 13 shall not apply to (i) the approval, execution,
delivery or performance of the Merger Agreement or (ii) the consummation of the Merger or
any of the other transactions contemplated by and pursuant to the Merger Agreement.”


8. Amendment of Section 21. Section 21 of the Rights Agreement is amended to provide that any
successor rights agent shall, at the time of its appointment as rights agent, have a combined
capital and surplus of at least $10 million, rather than $50 million.



9. Amendment of Section 26. Section 26 of the Rights Agreement is amended to provide that notices
or demands to be given or made on the rights agent shall be addressed as follows:





AMERICAN STOCK TRANSFER & TRUST COMPANY

59 Maiden Lane

New York, NY 10038

Attention: Corporate Trust Department

Telecopier: (718) 921-8310


10. Addition of Section 35. The Rights Agreement is amended to add the following Section 35 to the
Rights Agreement:





     “Section 35. Termination. Immediately prior to the effective time of the Merger, (i)
this Agreement shall be terminated and be without any further force or effect, (ii) none of
the parties to this Agreement will have any rights, obligations or liabilities hereunder,
(iii) the Rights shall expire and become null and void and (iv) the holders of the Rights
shall not be entitled to any benefits, rights or other interests under this Agreement,
including without limitation the right to purchase or otherwise acquire shares of the Common
Stock or any other securities of the Company.”


11. Appointment of Rights Agent. Pursuant to Section 21 of the Rights Agreement, the Company
hereby appoints AST as rights agent, and AST hereby accepts the appointment as rights agent, to
serve in that capacity for the consideration and subject to all of the terms and conditions of the
Rights Agreement. From and after the date hereof, each and every reference in the Rights Agreement
shall be deemed to be a reference to AST.




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12. Effectiveness. This Rights Agreement Amendment shall be deemed effective as of the date first
written above. This Rights Agreement Amendment has been duly authorized and executed by the
parties hereto and is in full force and effect. Except as amended hereby, the Rights Agreement
shall remain in full force and effect and shall be otherwise unaffected hereby.



13. Severability. If any term, provision, covenant or restriction of this Rights Agreement
Amendment is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement Amendment shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.



14. Governing Law. This Rights Agreement Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts made and to be performed entirely within
Delaware.



15. Counterparts. This Rights Agreement Amendment may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.




[Signature page follows.]




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     IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement Amendment to be duly
executed by their respective authorized officers, all as of the day and year first above written.



	 	 	 	 	 	 	 
	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 /s/ Karen Trachtenberg 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Karen Trachtenberg 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PEGASUS SOLUTIONS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John F. Davis, III 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	John F. Davis, III 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Chairman and Chief Executive Officer 	 	 
	 

	 	 	 	 	 	 






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