Exhibit 10.1

 

LODGENET HEALTHCARE, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

 

AGREEMENT, effective as of January 1, 2012 by and between LodgeNet
Healthcare, Inc., a Delaware corporation located at 3900 West Innovation Street,
Sioux Falls, South Dakota 57107 (“Corporation”), and Gary L. Kolbeck
(“Executive”).

 

WHEREAS, the Executive is President of the Corporation in the capacity and with
the title set forth on Appendix A hereto:

 

WHEREAS, the Board of Directors (“Board”) has determined that it would be in the
best interest of the Corporation and its shareholders to provide for the
employment of Executive on the terms set forth herein, and the Compensation
Committee of the Board of Directors of LodgeNet Interactive Corporation, the
parent entity of the Corporation has consented to the execution of this
Agreement; and

 

WHEREAS, the Executive is willing to serve the Corporation in accordance with
the provisions of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:

 

1.  Definitions.  Capitalized terms used herein shall have the meanings set
forth in Appendix B, which is attached hereto and incorporated herein by
reference.

 

2.  Term of Employment.  The employment of Executive by the Corporation pursuant
to this Agreement shall be for a period (the “Term”) beginning on the date
hereof and continuing, unless sooner terminated as provided in Section 7 herein,
through December 31, 2012; provided, however, that on each December 31,
commencing with 2012, such period of employment shall automatically be extended
for an additional year, (in which case the Term shall be deemed to have been
extended through December 31 of the next succeeding year), unless sixty (60)
days prior to the expiration of the then-current Term either party hereto has
given written notice to the other that such party does not wish to extend the
period of employment.

 

3.  Duties.  During the Term, Executive shall serve as in the capacities and
with the title(s) set forth in Appendix A, or in such other office or offices to
which he shall be elected by the Board of Directors of the Corporation (“Board”)
with Executive’s approval, performing the duties of such office or offices as
are assigned to Executive by the Board or committees of the Board or the Chief
Executive Officer of the Corporation. During the Term, Executive shall devote
his full time and attention to the business of the Corporation and the discharge
of the aforementioned duties, except for permitted vacations, absences due to
illness, and reasonable time for attention to personal affairs.

 

4.  Work Location.  During the Term, Executive shall have an office at the
facility specified on Appendix A.

 

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5.  Compensation.  As compensation for the services performed hereunder, the
Corporation shall pay or provide to Executive the following:

 

(a)          The Corporation shall pay Executive a salary (the “Base Salary”),
calculated at the rate per annum set forth on Appendix A (which Base Salary may
be increased by the Corporation at any time and from time to time in its
discretion). The Base Salary shall be payable monthly, semi-monthly or weekly
according to the Corporation’s general practice for its executives, for the Term
of this Agreement.

 

(b)         During the Term, Executive shall be allowed to participate in such
bonus and other incentive compensation programs in accordance with their terms
as the Corporation may have in effect from time to time for its executive
personnel, and all compensation and other entitlements earned pursuant to such
programs shall be in addition to, and shall not in any way reduce, the amount
payable as Base Salary.

 

(c)          During the Term, Executive shall be entitled to:

 

(i)             participate in such retirement, investment, health (medical,
hospital and/or dental) insurance, life insurance, disability insurance and
accident insurance plans and programs as are maintained in effect from time to
time by the Corporation for its salaried employees;

 

(ii)          participate in other non-duplicative benefit programs which the
Corporation may from time to time offer generally to executive personnel of the
Corporation; and

 

(iii)       accrue vacation time, sick leave, or other forms of paid time off in
accordance with the Corporation’s policy for executive personnel.

 

(d)         During the Term, the Board from time to time in its discretion may
grant to Executive stock options, restricted stock and other rights related to
shares of the Corporation’s common stock, and may designate the terms on which
such rights vest.

 

6.  Effect of Disability and Certain Hazards.  Executive shall not be obligated
to perform the services set forth in this Agreement during any period of
Disability, and relief from such obligation shall not in any way affect his
rights hereunder except to the extent that such Disability may result in
termination of his employment by the Corporation pursuant to Section 7 herein.

 

7.  Termination of Employment.   The employment of Executive by the Corporation
pursuant to this Agreement may be terminated on or prior to the expiration of
the then current Term as follows:

 

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(a)          Termination in the Event of Death.  In the event of Executive’s
death prior to the expiration of the Term, such employment shall automatically
terminate on the date of Executive’s death.

 

(b)         Termination in the Event of Disability.  The Corporation may
terminate this Agreement due to Executive’s Disability prior to the expiration
of the Term on not less than thirty (30) days prior written notice, unless prior
to the expiration of said 30 day period, Executive shall have returned to the
effective performance of Executive’s duties on a full-time basis. Any dispute as
to the existence of a Disability shall be settled by the opinion of an impartial
physician selected by the parties or their representatives or, in the event of
failure to make a joint selection after request therefore by either party to the
other, a physician selected by the Corporation, with the fees and expenses of
any such physician to be borne by the Corporation.

 

(c)          Termination for Cause.  The Corporation, by giving written notice
of termination to Executive, may terminate Executive’s employment at any time
prior to the expiration of the Term for Cause, with Cause to be determined by
the Board after reasonable notice to the Executive and an opportunity for
Executive to be heard at a meeting of the Board and with reasonable opportunity
(of not less than 30 days) in the case of willful neglect of material duties to
cease such neglect.  For purposes of this Section 7(c), no act or failure to act
on the Executive’s part shall be considered “willful” unless done or omitted to
be done by Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Corporation.

 

(d)         Termination Without Cause.  The Corporation may terminate such
employment at any time prior to the expiration of the Term without Cause (which
shall be for any reason not covered by preceding subsections (a) through (c))
upon 60 days prior written notice to Executive.

 

(e)          Date of Termination.  Unless otherwise agreed by the Executive and
Corporation or otherwise provided in this Agreement, the effective date of
termination shall be determined as follows:

 

(i)                         if this Agreement is terminated by death, the
effective date of shall be the date of Executive’s death,

 

(ii)                      if the Executive’s employment is terminated due to a
Disability, the effective date of termination shall be thirty (30) days after
the Notice of Termination is given (provided that the Executive shall not have
returned to the effective performance of his duties on a full-time basis during
such period),

 

(iii)               if the Executive’s employment is terminated for Cause, the
effective date of termination shall be the date specified in the Notice of
Termination, and

 

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(iv)                  if the Executive’s employment is terminated for any other
reason, the effective date of termination shall be sixty (60) days after the
Notice of Termination.

 

8.               Payments Upon Termination.

 

(a)          Except as otherwise provided in subsections (b) or (c) of this
Section 8, upon termination of Executive’s employment by the Corporation, all
compensation due Executive under this Agreement and under each plan or program
of the Corporation in which Executive may be participating at the time shall
cease to accrue as of the date of such termination (except, in the case of any
such plan or program, if and to the extent otherwise provided in the terms of
such plan or program), and all such compensation accrued as of the date of such
termination but not previously paid shall be paid to Executive at the time such
payment otherwise would be due, and in any event no later than the Last Payment
Date.  Unless otherwise expressly provided in the terms of the bonus plan or
program of the Corporation in which the Executive is a participant at the time
of his termination, if the termination of Executive’s employment is for any
reason other than a termination for Cause in accordance with Section 7(c) above,
then a pro rata portion of the “target” full year’s bonus shall be deemed to
have accrued for the Executive under such bonus plan or program for the portion
of the year ended on the date of the termination, which shall be paid to the
Executive within 10 days of the date of termination and no later than the Last
Payment Date.

 

(b)         If Executive’s employment pursuant to this Agreement is terminated
by the Corporation without Cause pursuant to Section 7(d) above, or if the
Corporation elects at any time not to renew or extend this Agreement at the
expiration of the then current Term, and provided that subsection (c) below does
not apply, then Executive shall receive, subject to the mitigation provisions of
subsection (d) below, in a single sum payable at the time of termination, and no
later than the Last Payment Date, a cash severance payment (the “Severance
Payment”) from the Corporation.  The amount of the Severance Payment shall be
equal to the Executive’s then monthly Base Salary increased by a factor of
twenty percent (20%) to account for the Executive’s loss of benefits, multiplied
by the number of months in the Severance Period as set forth in Appendix A
hereof.  Executive shall have the right to purchase health and dental coverage
under the Company’s group policies then in effect for the Severance Period.  
The Severance Payment is subject to required withholding.  The Executive shall
not be entitled to Severance Payments in any event if he is terminated for Cause
as permitted by Section 7(c).

 

(c)   Termination Following Change in Control.

 

(i)                         If a Change in Control of the Corporation occurs
during the Term of this Agreement, or if Executive’s employment with the
Corporation is terminated by the Corporation without Cause prior to but in
connection with a Change in Control (meaning that at the time of such
termination the Company had

 

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entered into an agreement, the consummation of which would result in a Change in
Control, or any person had publicly announced its intent to take or consider
actions that would constitute a Change in Control, or the Board adopts a
resolution to the effect that a potential Change in Control for purposes of this
Agreement has occurred), then  the Executive shall be entitled to the
compensation provided in Section 8(c)(ii) below upon the termination of the
Executive’s employment by the Corporation or by the Executive, unless the
Corporation elects to terminate this Agreement pursuant to the provisions of
Section 7 (a), (b) or (c) above or because the Executive terminates this
Agreement other than for Good Reason.

 

(ii)                      If the Executive shall be terminated from employment
with the Corporation following the occurrence of a Change of Control such that
Executive is entitled to the compensation set forth in this Section 8(c)(ii),
then the Executive shall be entitled to receive the following severance benefits
in lieu of any other benefits the Executive would otherwise be entitled to
pursuant to this Agreement:

 

(a)          Severance Payment.  The Corporation shall pay as severance pay to
the Executive an amount equal to the Executive’s then monthly Base Salary
increased by a factor of twenty percent (20%) to account for the Executive’s
loss of benefits for a twelve (12) month period (the “Payment Period”) at an
annualized rate equal to the higher of the rate in effect immediately prior to
the Change in Control or the rate in effect on the date of the Notice of
Termination.  Such cash payment shall be payable in a single sum, within 10 days
following the Executive’s Date of Termination and no later than the Last Payment
Date.

 

(b)         Incentive Awards. The Executive shall receive a cash payment in a
single sum, within 10 days following the Executive’s Date of Termination, and no
later than the Last Payment Date, in the amount equal a pro rata portion of the
“target” full year’s bonus for the Executive under such bonus plan or program
for the portion of the year ending on the date of the termination, with a
partial month counted as a completed month.

 

(c)          Acceleration of Equity Grants.  Any non-vested stock options,
restricted stock or other equity award granted to the Executive by the
Corporation shall become 100% vested and all restrictions or conditions to the
receipt of such securities, included but not limited to any applicable
performance criteria, shall be waived, up to 100% of the “target” shares that
were to have been delivered to the executive under any performance-based plan,
or 100% of the total shares under a time-based vesting plan.  In addition,
(i) any stock options shall be exercisable until the first to occur of (y) the
expiration date of the

 

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applicable option or (z) one (1) year following the date of  termination and
(ii) shares of restricted stock or other equity awards shall be delivered free
of all restrictions within 30 days of the date of termination.  If any plan
pursuant to which stock options, restricted stock or other equity awards have
been issued is not assumed by the successor entity, all such rights will
immediately accelerate and be exercisable on the date of the Change of Control.

 

(d)         Insurance and Welfare Benefits.  Executive shall have the right to
purchase health and dental coverage under the Company’s group policies then in
effect for the Severance Period.

 

(e)          Tax Gross-Up.  If any payments received by Executive pursuant to
this Agreement will be subject to the excise tax (the “Excise Tax”) imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or
any successor or similar provision of the Code, the Corporation shall pay to the
Executive additional compensation such that the net amount received by the
Executive after deduction of any Excise Tax (and taking into account any
federal, state and local income taxes payable by the Executive as a result of
the receipt of such gross-up compensation), shall be equal to the total payments
he would have received had no such Excise Tax (or any interest or penalties
thereon) been paid or incurred.  The Corporation shall pay such additional
compensation no later than the Last Payment Date.  The calculation of the tax
gross-up payment shall be approved by the Corporation’s independent certified
public accounting firm and the Executive’s designated financial adviser.

 

(iii)                   Notice of Good Reason.  If Executive believes that
Executive is entitled to terminate employment with the Corporation for Good
Reason, the Executive may apply in writing to the Corporation for confirmation
of such entitlement prior to the Executive’s actual separation from employment,
by following the claims procedure set forth in Section 14 hereof.  The
submission of such a request by Executive shall not constitute Cause for the
Corporation to terminate an Executive, and Executive shall continue to receive
all compensation and benefits otherwise payable pursuant to this Agreement at
the time of such submission throughout the resolution of the matter pursuant to
the procedures set forth in Section 14 hereof.  If the Executive’s request for a
termination of employment for Good Reason is denied under both the request and
appeal procedures set forth in Section 14(b) and (c) hereof, then the parties
shall use their best efforts to resolve the claim within ninety (90) days after
the claim is submitted to binding arbitration pursuant to Section 14(d).

 

(iv)                  All rights of the Executive pursuant to this
Section 8(c) shall terminate on the second anniversary following the occurrence
of a Change in Control.

 

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(d)         No Mitigation.  The Executive shall not be required to mitigate the
amount of any payments provided for by this Agreement by seeking employment or
otherwise, nor shall the amount of any cash payments or benefit provided under
this Agreement be reduced by any compensation or benefit earned by the Executive
after his Date of Termination (except as provided in Section 8(c)(ii)(d) above).

 

(e)          Additional Requirement for Severance Compensation.  The amounts
payable pursuant to this Section 8 shall be paid only upon an Executive’s
execution and delivery to the Corporation of an agreement and general release in
such form as is acceptable to the Corporation, in its sole discretion, under
which, among other things, the Executive shall release and discharge the
Corporation and related persons from all claims and liabilities relating to the
Executive’s employment with the Corporation and/or the termination of the
Executive’s employment, including without limitation, claims under the Age
Discrimination in Employment Act and the Older Workers Benefit Protection Act,
where applicable. Notwithstanding anything to the contrary contained herein,
payment of the amounts payable pursuant to this Section 8 will be paid only
after the Release Effective Date and expiration of all periods of permitted
rescission under federal or state law for such releases.

 

9.  Confidential Information.   Executive shall not at any time during the
period of employment and thereafter disclose to others or use any trade secrets
or any other confidential information belonging to the Corporation or any of its
subsidiaries or Affiliates, including, without limitation, drawings, plans,
programs, specifications, code, algorithms, methods, techniques, systems,
processes, designs and diagrams and non-public information relating to
(i) customers of the Corporation or its subsidiaries or Affiliates, (ii) the 
business plans and budgets of the Corporation, its subsidiaries or Affiliates,
and (iii) the financial information, including projections, plans and budgets of
the Corporation, its subsidiaries or Affiliates, except as may be required to
perform his duties hereunder.  The provisions of this Section 9 shall survive
the termination of Executive’s employment with the Corporation, provided that
after the termination of Executive’s employment with the Corporation, the
restrictions contained in this Section 9 shall not apply to any such trade
secret or confidential information which becomes generally known in the trade
from a source other than Executive. The Company acknowledges that your exposure
to the Company’s business, including confidential information, will inevitably
enhance your knowledge and understanding of the Company’s industry in a way that
cannot be separated from your other knowledge and the Company agrees that,
without limiting your obligations under this Agreement, this Agreement shall not
restrict your use of such overall knowledge and understanding of the Company’s
industry for your own purposes.

 

10.  Patents, Etc.   The Corporation shall be entitled to any and all ideas,
know-how and inventions, whether patentable or not, which Executive shall
conceive, make or develop during the Executive’s period of employment with the
Corporation, which relates to the business of the Corporation or any of its
subsidiaries or Affiliates.  Executive shall, from time to time, at the request
of the Corporation, execute and deliver such instruments or documents, and shall
perform or do such acts or things, as reasonably may be requested in order that
the Corporation may have the benefit of such ideas, know-how and inventions and,
in particular, so that patent

 

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applications may be prepared and filed in the United States Patent Office, or in
appropriate places in foreign countries, covering any of the patentable ideas or
inventions covered by this Agreement as aforesaid, including appropriate
assignments vesting in the Corporation or any of its subsidiaries or Affiliates
(or any successor to the Corporation or any of its subsidiaries or Affiliates)
full title to any and all such ideas, inventions and applications.  Further,
Executive will cooperate and assist the Corporation in the prosecution of any
such applications in order that patents may issue thereon.

 

11.  Non-Competition.

 

(a)          If Executive receives severance compensation pursuant to Section 8
above, or if Executive is terminated for Cause, Executive agrees that Executive
will not, without the prior written consent of the Corporation, directly or
indirectly, during the twelve (12) month period following the Date of
Termination, engage in any business or employment or provide any consulting
service to any person or organization, or to a division or operating unit of any
organization which is involved principally in providing interactive patient
television solutions to healthcare facilities in the United States (a “Competing
Business”); provided, however, that the parties acknowledge and agree an entity
shall not be deemed to be a Competing Business if (i) interactive patient
television solutions comprises less than twenty (20%) percent of the revenues of
such business and (ii) Executive’s principal duties do not involve operation or
oversight of that portion of the enterprise involved in providing interactive
patient television solutions to healthcare facilities.  In the event that
Executive violates the provisions of this subparagraph (a), the Corporation
shall have the right, in addition to such other remedies as the Corporation may
have available to it, to recover that portion of the amounts payable to
Executive pursuant to the provisions of Sections 8(b) or 8(c)(ii) of this
Agreement which relate to the period of time Executive is found to have been in
violation of the terms of this subparagraph.

 

(b)         During the Term, Executive shall not enter into endeavors that are
competitive with the business or operations of the Corporation, and shall not
own an interest in, manage, operate, join, control, lend money or render
financial or other assistance to or participate in or be connected with, as an
officer, employee, director, partner, stockholder, member, venturer, advisor,
consultant or otherwise (except for passive investments of not more than a one
percent interest in the securities of a publicly held corporation regularly
traded on a national securities exchange or in an over-the-counter securities
market) any Competing Business.

 

12.                                 Successors.

 

(a)          The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation, by agreement
in form and substance reasonably satisfactory to the Executive, to expressly
assume and agree to perform the obligations of the Corporation under this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform this Agreement if no such succession had

 

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taken place.  Failure of the Corporation to obtain such agreement prior to the
effective date of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Corporation in the same
amount and on the same terms as he would be entitled to receive hereunder if he
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.  As used in this Agreement,
“Corporation” shall mean the Corporation as hereinbefore defined and any
successor to its business and/or assets as aforesaid, which successor executes
and delivers the agreement provided for in this Section 12(a) or which otherwise
becomes bound by the terms and provisions of this Agreement by operation of law.

 

(b)         This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Executive should die after his termination while
any amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive’s devisee, legatee, or other
designee or, if there be no such designee, to the Executive’s estate.

 

13.     Notices.  Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested, or by
recognized courier service (regularly providing proof of delivery), addressed to
the Corporation at the Corporation’s then principal office, or to the Executive
at the address set forth under the Executive’s signature below, as the case may
be, or to such other address or addresses as any party hereto may from time to
time specify in writing for the purpose in a notice given to the other parties
in compliance with this Section 13.  Notices shall be deemed given when
received.

 

14.  Administrator and Claims Procedure.

 

(a)          In the event the Executive believes he or she has been wrongfully
denied the payment of benefits, the Executive shall follow the procedures set
forth in this Section 14.  If the Executive is claiming benefits as a result of
a termination of employment pursuant to Section 7(c), the Executive shall
disregard subsections (b) and (c) hereof and shall proceed directly to
arbitration pursuant to subsection (d) hereof.  The Administrator for purposes
of this Agreement shall be the Corporation.  The Corporation shall have the
right to designate specific persons affiliated with the Corporation or a third
party as Administrator at any time.  The Corporation shall give the Executive
written notice of any change in the Administrator, or in the address or
telephone number of the same.

 

(b)         The Executive, or other person claiming through the Executive, must
file a written claim for benefits with the Administrator as a prerequisite to
the payment of benefits under this Agreement.  The Administrator shall make all
determinations as to the right of any person to receive benefits under
subsections (b) and (c) of this Section

 

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14.  Any denial by the Administrator of a claim for benefits by the Executive,
his heirs or personal representative (“the claimant”) shall be stated in writing
by the Administrator and delivered or mailed to the claimant within 30 days
after receipt of the claim, unless special circumstances require an extension of
time for processing the claim.  If such an extension is required, written notice
of the extension shall be furnished to the claimant prior to the termination of
the initial 30-day period.  In no event shall such extension exceed a period of
30 days from the end of the initial period.  Any notice of denial shall set
forth the specific reasons for the denial, specific reference to pertinent
provisions of this Agreement upon which the denial is based, a description of
any additional material or information necessary for the claimant to perfect his
claim, with an explanation of why such material or information is necessary, and
any explanation of claim review procedures, written to the best of the
Administrator’s ability in a manner that may be understood without legal or
actuarial counsel.

 

(c)          A claimant whose claim for benefits has been wholly or partially
denied by the Administrator may request, within 30 days following the date of
such denial, in a writing addressed to the Administrator, a review of such
denial.  The claimant shall be entitled to submit such issues or comments in
writing or otherwise as he shall consider relevant to a determination of his
claim, and he may include a request for a hearing in person before the
Administrator.  Prior to submitting his request, the claimant shall be entitled
to review such documents as the Administrator shall agree are pertinent to his
claim.  The claimant may, at all stages of review, be represented by counsel,
legal or otherwise, of his choice, provided that the fees and expenses of such
counsel shall be borne by the claimant, unless the claimant is successful, in
which case, such costs shall be borne by the Corporation.  All requests for
review shall be promptly resolved.  The Administrator’s decision with respect to
any such review shall be set forth in writing and shall be mailed to the
claimant not later than 30 days following receipt by the Administrator of the
claimant’s request unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing, in which case the
Administrator’s decision shall be so mailed not later than 60 days after receipt
of such request.

 

(d)         A claimant who has followed the procedure in subsections (b) and
(c) of this section, or has been terminated pursuant to Section 7(c) after
having been given the opportunity to be heard by the Board, and who has not
obtained full relief on his claim for benefits, may, within 60 days following
his receipt of the Administrator’s written decision on review, or the Board’s
decision, as the case may be, apply in writing to the Administrator for
expedited and binding arbitration of his claim before an arbitrator in Sioux
Falls, South Dakota, in accordance with the commercial arbitration rules of the
American Arbitration Association, as then in effect, or pursuant to such other
form of alternative dispute resolution as the parties may agree (collectively,
the “arbitration”).  The Corporation shall advance filing fees and other costs
required to initiate the arbitration, as well as up to $2,500 for Executive’s
initial attorney fees (which fees and costs shall not be recoverable by the
Corporation).  The arbitrator’s sole authority shall be to interpret and apply
the provisions of this

 

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Agreement; he shall not change, add to, or subtract from, any of its
provisions.  The arbitrator shall have the authority to award compensatory
damages, but shall not have the authority to award punitive, consequential or
exemplary damages. The arbitrator shall have the power to compel attendance of
witnesses at the hearing.  Any court having jurisdiction may enter a judgment
based upon such arbitration.  The arbitrator shall be appointed by mutual
agreement of the Corporation and the claimant pursuant to the applicable
commercial arbitration rules.  The arbitrator shall be a professional person
with a reputation in the community for expertise in employee benefit matters and
who is unrelated to the claimant and any employees of the Corporation.  All
decisions of the arbitrator shall be final and binding on the claimant and the
Corporation.

 

15.  Legal Fees and Expense.  The Corporation shall pay Executive’s
out-of-pocket expenses, including attorneys’ fees, but not to exceed a total of
$10,000 for any proceeding or group of related proceedings to enforce, construe
or determine the validity of the provisions for termination benefits in
accordance with this Agreement, provided, however, that if any arbitration or
litigation results in a finding in favor of Executive contrary to the position
of the Corporation, then Executive will be reimbursed for all reasonable legal
and related costs regardless of the limitation set forth above; and further
provided that in no event will Executive be held liable for the legal and
related costs of the Corporation in an event of a finding in favor of the
Corporation.  Amounts, if any, paid to the Executive pursuant to this Section 15
shall be in addition to all other amounts due to executive pursuant to this
Agreement.

 

16.  Non-Alienation of Benefits.  Except in so far as this provision may be
contrary to applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization or attachment of any benefits under this Agreement shall be
valid or recognized by the Corporation.

 

17.  Miscellaneous.

 

(a)          This Agreement contains the entire agreement of the parties
relating to the subject matter hereof and supersedes any prior written or oral
agreements or understandings relating to the subject matter hereof.  No
modification or amendment of this Agreement shall be valid unless in writing and
signed by or on behalf of the parties hereto.  A waiver of the breach of any
term or condition of this Agreement shall not be deemed to constitute a waiver
of any subsequent breach of the same or any other term or condition.  This
Agreement is intended to be performed in accordance with, and only to the extent
permitted by, all applicable laws, ordinances, rules and regulations.  If any
provisions of this Agreement, or the application thereof to any person or
circumstance, shall, for any reason and to any extent, be held invalid or
unenforceable, such invalidity and unenforceability shall not affect the
remaining provisions hereof and the application of such provisions to other
persons or circumstances, all of which shall be enforced to the greatest extent
permitted by law.  Subject to the provisions of Section 8(c)(ii)(e), the
compensation provided to the Executive pursuant to this Agreement shall be
subject to any withholdings and deductions required by any applicable tax laws. 
Any amounts payable to the Executive hereunder after the death of the Executive
shall be paid to the Executive’s

 

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estate or legal representative.  The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of any provision hereof.  For purposes hereof, the masculine gender
shall be deemed to include the feminine gender, as appropriate.  This Agreement
may be executed in one or more counterparts and each counterpart shall be deemed
an original but all counterparts together shall constitute one instrument.

 

(b)         This Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Corporation, including any party with
which the Corporation may merge or consolidate or to which it may transfer
substantially all of its assets.

 

(c)          The rights and obligations of Executive under this Agreement are
expressly declared and agreed to be personal, nonassignable and nontransferable
during his life, but upon his death this Agreement shall inure to the benefit of
his heirs, legatees and legal representatives of his estate, but only to the
extent of any remaining financial obligations of the Corporation.

 

(d)         The waiver by either party hereto of its rights with respect to a
breach of any provision of this Agreement by the other shall not operate or be
construed as a waiver of any rights with respect to any subsequent breach.

 

(e)          No modification, amendment, addition, alteration or waiver of any
of the terms, covenants or conditions hereof shall be effective unless made in
writing and duly executed by the Corporation and Executive.

 

(f)            This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together will
constitute but one and the same agreement.

 

(g)         If any provision of this Agreement is determined to be invalid or
unenforceable under any applicable statute or rule of law, it is to that extent
to be deemed omitted and it shall not affect the validity or enforceability of
any other provision.

 

(h)         Any notice required or permitted to be given under this Agreement
shall be in writing, and shall be deemed given when sent by registered or
certified mail, postage prepaid, addressed as follows:

 

If to Executive:

to the address set forth on

 

Appendix B hereto

 

 

If to the Corporation:

LodgeNet Healthcare, Inc.

 

3900 West Innovation Street

 

Sioux Falls, SD 57107

 

Attn: General Counsel

 

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or mailed to such other person and/or address as the party to be notified may
hereafter have designated by notice given to the other party in a similar
manner.

 

18.  Prior Agreements Superseded.  This Agreement supersedes all prior
agreements, if any, between the parties hereto with respect to the subject
matter hereof.  In addition, the definitions of “Cause,” “Good Reason” and
“Change in Control” contained herein supersede and replace any conflicting
provisions in any option grant agreement or any restricted stock agreement
between the Corporation and the Executive (in any such case, an “Equity
Agreement”) and the Executive, by executing this Agreement, hereby agrees that
all his or her existing Equity Agreements, and all Equity Agreements to which he
or she may become subject or party to during the Term, are and shall be hereby
amended to supersede and replace such provisions.

 

19.  Survival of Certain Provisions.  The provisions of sections 9, 10 and
11(a) of this Agreement shall survive the termination of this Agreement,
provided that any claims pursuant to such sections must be brought within one
year of the date of the termination of this agreement.

 

20.  Compliance with Section 409A of Internal Revenue Code (“Section 409A).  The
provisions of this Agreement regarding amounts that are determined to be subject
to Section 409A shall be interpreted and administered in accordance with
Section 409A and the regulations and guidance issued thereunder. 
Notwithstanding anything to the contrary contained herein, no payment of an
amount subject to Section 409A on account of the Executive’s “separation from
service” (as defined in Section 409A and the regulations and guidance issued
thereunder) shall be made to the Executive if the Executive is determined to be
a “specified employee” within the meaning of Section 409A at the time of the
Executive’s separation from service.  Any such amounts to which the Executive
would otherwise be entitled under this Agreement during the first six months
following a separation from service shall be accumulated and paid on the first
day of the seventh month following the Executive’s separation from service.

 

21.  Governing Law.  This Agreement shall be governed and construed in
accordance with the internal laws of the State of South Dakota.  The parties
agree that any suit or proceeding arising out of this Agreement shall be brought
and maintained exclusively in the federal or state courts located in such state,
and each of the parties hereby irrevocably submits to the exclusive jurisdiction
and venue of such courts.

 

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IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement
as of the day and year first above written.

 

 

EXECUTIVE:

 

LODGENET HEALTHCARE, INC.:

 

 

 

 

 

 

/s/ Gary L. Kolbeck

 

By:

/s/ Scott C. Petersen

Gary L. Kolbeck

 

 

 

 

 

Address: 27019 Rolling Thunder Lane

 

 

Sioux Falls, SD 57108

 

 

 

 

 

Date of Execution:  June 22, 2012

 

 

 

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Appendix A

 

Employee Name:   Gary Kolbeck

 

Employee Address:                                        27019 Rolling Thunder
Lane

Sioux Falls, SD 57108

 

Position/Title:                     President, LodgeNet Healthcare, Inc.

 

Work Location:  Sioux Falls, SD 57107.

 

Base Salary:  $200,000.00

 

Benefit Stipend: $400.00 per month

 

Bonus Parameters:                                             At Plan
Performance, 50% of Base Salary

 

Severance Period:                                                 Twelve (12)
Months

 

Time-Based Restricted Stock (separate agreement):

Performance-Based Restricted Stock (separate agreement):

 

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Appendix B

 

DEFINITIONS

 

For the purpose of this Agreement, the following terms have the meanings
indicated:

 

“Affiliate” means any person or entity that directly or indirectly controls, is
controlled by, or is under common control with the Corporation.

 

“Cause” means one or more of the following:

 

(a)                                  acts committed during the Term of this
Agreement resulting in a felony conviction under any federal or state statute;

 

(b)                                 willfully engaging in dishonest or
fraudulent action or omission resulting or intended to result in any
demonstrable and material financial or economic harm to the Corporation, or
which materially damages the Corporation’s reputation; or

 

(c)                                  willful breach of this Agreement, willful
neglect of the material duties of the Executive under this Agreement, gross and
willful misconduct, or willful and material violation of (x) the Corporation’s
Code of Business Conduct and Ethics or (y) the Corporation’s Employee Handbook
(as amended from time to time) which results or is reasonably likely to result
in any demonstrable and material financial or economic harm to the Corporation,
or to materially damage the Corporation’s reputation.

 

“Change in Control” means the occurrence of any of the following:

 

(a)          any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in effect
on the date hereof) or group of persons acting in concert, other than the
Corporation or any subsidiary thereof or any employee benefit plan of the
Corporation or any subsidiary thereof, becomes the “beneficial owner” (as such
term is defined in Rule 13d-3 of the Exchange Act except that a person shall
also be deemed the beneficial owner of all securities which such person may have
a right to acquire, whether or not such right is presently exercisable),
directly or indirectly, of securities of the Corporation representing thirty
percent (30%) or more of the combined voting power of the Corporation’s then
outstanding securities ordinarily having the right to vote in the election of
directors (“voting stock”); or

 

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(b)         during any period subsequent to the date of this Agreement, less
than fifty (50%) of the members of the Board of the Corporation cease to be
comprised of persons nominated by LodgeNet Interactive Corporation; or

 

(c)          there shall be consummated any merger, consolidation (including a
series of mergers or consolidations), or any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation (meaning assets representing
thirty percent (30%) or more of the net tangible assets of the Corporation or
generating thirty percent (30%) or more of the Corporation’s operating cash
flow), or any other similar business combination or transaction,  but excluding
any business combination or transaction which: (i) would result in the voting
stock of the Corporation immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting stock of the
surviving entity) more than 70% of the combined voting power of the voting stock
of the Corporation (or such surviving entity) outstanding immediately after
giving effect to such business combination or transaction; or (ii) would be
effected to implement a recapitalization (or similar transaction) of the
Corporation in which no “person” (as defined in subsection 3(a) hereof) or group
of persons acting in concert becomes the beneficial owner (as defined in
subsection 3(a) hereof) of thirty percent (30%) or more of the combined voting
power of the then outstanding voting stock of the Corporation; or

 

(d)         the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation; or

 

(e)          the occurrence of any other event that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A of the
Exchange Act in effect on the date hereof.

 

“Disability” means any physical or mental condition which prevents the effective
performance on a full time basis by Executive of the duties set forth in this
Agreement or otherwise assigned to Executive as contemplated by this Agreement
for a period of more than 180 days.

 

“Good Reason” means any of the following which occur following a Change of
Control:

 

(a)          the assignment to the Executive of any duties materially
inconsistent with the Executive’s positions, duties, responsibilities and status
with the Corporation immediately prior to a Change in Control, or a significant
adverse alteration in the nature of the Executive’s reporting responsibilities,
titles, or offices as in effect immediately prior to a Change in Control, or any
removal of the Executive from, or any failure to reelect the Executive to, any
such positions, except in connection with a termination of the employment of the
Executive for Cause, Permanent Disability, or as a result of the Executive’s
death or by the Executive other than for Good Reason;

 

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(b)         a reduction by the Corporation in the Executive’s base salary or in
the percentage of base salary used in computing Executive’s bonus in effect
immediately prior to a Change in Control;

 

(c)      any material breach by the Corporation of any provision of this
Agreement;

 

(d)         following a Change in Control, the Executive is excluded (without
substitution of a substantially equivalent plan) from participation in any
benefit, incentive, stock option, health, dental, insurance or pension plan
generally made available to persons at Executive’s level of responsibility in
the Corporation;

 

(e)          without the Executive’s express written consent, the requirement by
the Corporation that the Executive’s principal place of employment be relocated
more than fifty (50) miles from his place of employment prior to the Change in
Control, or travel on the Corporation’s business to an extent materially greater
than the Executive’s customary business travel obligations;

 

(f)            the Corporation’s failure to obtain a satisfactory agreement from
any successor to assume and agree to perform the Corporation’s obligations under
this Agreement.

 

“Last Payment Date” means the date that is two and one-half months after the
close of the taxable year in which the Executive incurs a separation from
service.

 

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GENERAL RELEASE OF ALL CLAIMS

 

This General Release of All Claims (“Agreement”) is entered into by and between
the undersigned,                         (“Employee”) LODGENET INTERACTIVE
CORPORATION (the “Company”).  Employee and the Company are collectively referred
to as “Parties.”

 

In exchange for the payments made pursuant to the severance provisions of the
Employment Agreement  between Employee and the Company, Employee hereby
acknowledges full and complete satisfaction and hereby releases and forever
discharges the Company and each of its affiliates, subsidiaries, agents,
directors, officers, shareholders, employees, attorneys, successors, and
assigns, from any and all claims arising from or connected with Employee’s
employment by, or separation from the Company, including but not limited to, any
actions brought in tort or for breach of contract, or claims arising under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act
(“ADEA”), the Older Worker Benefits Protection Act (“OWBPA”), the Fair Labor
Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act of
1974, and any other federal or state statute, law or regulation relating to
employment.

 

In order to conform this release agreement with the rights provided by the Older
Workers Benefit Protection Act of 1990, Employee is aware of the following with
respect to release of any claims under the ADEA:

 

(1)                                  the right to consult with an attorney
before signing this Release.

 

(2)                                  Forty-five (45) days, in which to consider
this Release and any ADEA claim; and

 

(3)                                  Seven (7) days after signing this Release
to revoke this release to any ADEA claim.

 

This Agreement shall not be effective until the expiration of seven (7) days
following its execution by Employee.  In addition, Employee acknowledges that
the Company has provided Employee with a list of all employees eligible for and
offered benefits under the ETA Plan, with their ages and job titles in
compliance with the OWBPA.  Employee acknowledges that the names could change as
the Plan is implemented and that a current list will be available upon request
at the Human Resource office of the Company.

 

Employee agrees not to use any confidential information or trade secrets
acquired during employment with the Company for any other business or employment
without the prior written consent of the Company. Employee hereby assigns to the
Company all rights to any invention(s) developed or will develop relating at the
time of conception or reduction to practice to the Company’s business, or
resulting from work performed for the Company.

 

Employee further agrees that this Agreement, the terms and conditions of this
Agreement, and any and all actions by the Parties in accordance therewith, are
strictly confidential and

 

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Employee agrees not to disclose, discuss or reveal said information to any other
persons, entities or organizations, except that Employee may disclose this
information to immediate family members, counsel, personal tax advisor, or as
may be required by applicable law.  However, a violation of this confidentiality
agreement by any third party referenced-above will constitute a breach of this
Agreement.

 

The Parties hereby agree to submit any and all disputes regarding any aspect of
this Agreement or any act that allegedly has or would violate any provision of
this Agreement, to final and binding and confidential arbitration by a single
neutral arbitrator as the exclusive remedy for such claim or dispute.  Subject
to the terms of this paragraph, the arbitration proceedings shall be conducted
and administered by the American Arbitration Association (“AAA”) under its
National Rules for the Resolution of Employment Disputes then in effect.  The
arbitrator shall be experienced in labor and employment matters and shall be
appointed by agreement of the Parties hereto or, if no agreement can be reached,
pursuant to the AAA Rules.  In addition, should any party to this Agreement
hereafter institute any legal action or administrative proceeding against the
other with respect to any claim waived by this Agreement or pursue any
arbitrable dispute by any method other than said arbitration, the prevailing
party shall be entitled to recover from the other party all damages, costs,
expenses, and attorney’s fees incurred as a result of such action.

 

This Agreement represents and contains the entire agreement between Employee and
the Company relating to the matters described herein, and supersedes all prior
discussions and agreements, whether oral or written.

 

Employee affirms and represents that he is entering into this Agreement freely
and voluntarily, and that Employee is acting under no other inducement, or under
any coercion, threat or duress. Employee acknowledges that the contents of this
document have been explained to Employee and Employee understands the meaning
and legal effect of this Agreement.

 

 

Dated:

 

 

 

 

 

Employee Signature

 

 

 

 

 

 

Dated:

 

 

By:

 

 

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