Exhibit 10.27

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE MERITS OF THIS
INVESTMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

LODGENET ENTERTAINMENT CORPORATION

INCENTIVE STOCK OPTION
(KEY EMPLOYEE)

DATE: _______________, 200___

__________________________, Optionee:

          LODGENET ENTERTAINMENT CORPORATION (the “Company”), pursuant to its
2003 Stock Option and Incentive Plan, as amended (the “Plan”), has this day
granted to you, the Optionee named above, an option (the “Option”) to purchase
shares of the common stock, $.01 par value per share (“Common Stock”), of the
Company. This Option is intended to qualify as an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”). Terms not defined herein shall have the meanings given in
the Plan.

          The details of your Option are as follows:

          1. The total number of shares of Common Stock subject to this Option
is      Thousand (     ,000) shares.

          2. (a) The exercise price of this Option is $          per share,
representing a price not less than the higher of (i) the average of the closing
price for the Company’s Common Stock at the close of trading as reported by the
NASDAQ stock market for the ten consecutive trading days preceding today’s date
or (ii) the closing price for the Common Stock as so reported for today’s date.

               (b) The minimum number of shares with respect to which this
Option may be exercised at any one time shall be the lesser of ten (10) shares
or the number of shares remaining subject to this Option.

               (c) Unless the Board accelerates the vesting of any non-vested
Options in accordance with Section 22 of the Plan, the right of the Optionee to
exercise the Options granted hereunder shall vest as follows: (i)      shares on
the first anniversary hereof, (ii)      shares on the second anniversary hereof,
(iii)      shares on the third anniversary hereof and (iv)      shares on the
fourth anniversary hereof; provided , however, that for each respective group of
shares to vest and become subject to exercise by the Optionee, the Optionee must
be in the employment of the Company on the respective vesting date.

 

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          3. (a) The term of this Option commences on the date hereof and,
unless sooner terminated as set forth in the Plan or this Agreement, shall
terminate at 5:00 p.m. Central Time on      , 201     ; provided, however, that
this Option may not be exercised during the initial six (6) months of the term.

               (b) Notwithstanding the term specified in Section 3(a) above, as
set forth in Section 9(b) of the Plan, this Option shall expire upon the earlier
of the expiration date set forth in Section 3(a) or the date ninety (90) days
after the date Optionee’s employment with the Company or its subsidiaries
terminates for any reason other than death or disability pursuant to
Section 3(c) or retirement pursuant to Section 3(d).

               (c) If the employment of the Optionee with the Company and its
subsidiaries terminates by reason of disability (as determined by the Plan
Administrator) or death, the unexpired Options or portions thereof, if any, held
on the date of disability or death that would expire pursuant to the terms of
this Option during the 12-month period commencing on the date of disability or
death, shall expire on the last day of such 12-month period. During such
12-month period, any such Option or portion thereof referred to in the preceding
sentence may be exercised by the Optionee (or the Optionee’s legatee, executor,
personal representative or distributee) with respect to the same number of
shares and in the same manner and to the same extent as if the Optionee had
continued as a full-time employee of the Company or its subsidiaries during such
12 month period; provided, that the Optionee may not exercise any Option or
portion thereof that has not vested prior to or during such 12-month period. Any
unexpired Option or portion thereof held by the Optionee on the date of
disability or death that would expire pursuant to the terms of this Option on a
date more than 12 months after the date of disability or death, shall expire
unexercised on the date of disability or death.

               (d) If the employment of the Optionee with the Company and its
subsidiaries terminates due to retirement under any qualified retirement plan
maintained by the Company and/or any of its subsidiaries, this Option shall
expire on the earlier to occur of (i) the applicable expiration date or dates
set forth in this Option or (ii) the third anniversary of the date of such
termination of employment. If the Optionee who has so retired dies prior to
exercising in full any portion of this Option that has not expired pursuant to
the preceding sentence, then notwithstanding the preceding sentence, such Option
shall expire on the first anniversary of the date of the Optionee’s death.
During the period commencing on the date of retirement or death, as the case may
be, and ending on the applicable later expiration date, this Option may be
exercised by such Optionee (or the Optionee’s legatee, executor, personal
representative or distributee) with respect to the same number of shares and in
the same manner and to the same extent as if the Optionee had continued as a
full-time employee of the Company or its subsidiaries during such period;
provided, that no Option or portion thereof that has not vested prior to or
during such period may be exercised.

          4. This Option may be exercised by delivering to the Secretary of the
Company, during regular business hours, written notice of exercise accompanied
by full payment of the exercise price for the shares being purchased pursuant to
this Option, together with such additional documents as the Company may require
and in accordance with such other procedures as may then be in effect for the
exercise of options. Except as otherwise provided in the Plan or in this Option,
the exercise price for the shares to be acquired upon exercise of this Option
shall be paid in full (i) in cash or check payable to the order of the Company,
(ii) in Common Stock (which the Optionee

 

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has held for at least six months prior to the delivery of such shares or which
the Optionee purchased on the open market and in each case for which the
Optionee has good title, free and clear of all liens and encumbrances) valued at
its Fair Market Value on the date of exercise, (iii) in cash by a broker-dealer
to whom the holder of the Option has submitted an exercise notice consisting of
a fully-endorsed Option, or (iv) by such other medium of payment as the Plan
Administrator, in its discretion, shall authorize. In the case of payment
pursuant to (ii) or (iii) above, the holder’s election must be made on or prior
to the date of exercise of the Option and must be irrevocable.

          5. The Company may require the Optionee, or any person to whom an
Option is transferred under Section 6, as a condition of exercising the Option,
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person’s own account and
not with any present intention of selling or otherwise distributing the stock;
provided, however, that the requirement of providing such written assurances,
and any assurances given pursuant to such requirement, shall be inoperative if
the shares issuable upon exercise of this Option are then registered under the
Securities Act of 1933, as amended (the “Act”), or, if such shares are not then
so registered, there is delivered to the Company an opinion of counsel, which
may be counsel to the holder, reasonably satisfactory to the Company, that such
exercise and issuance would be exempt from the registration requirements of the
Act.

          6. This Option and any rights and privileges pertaining thereto, may
not be transferred, assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the laws of descent and
distribution and shall not be subject to execution, attachment or similar
process. The granting of this Option shall impose no obligation upon the
Optionee to exercise such Option.

          7. The number of shares of Common Stock subject to this Option and the
exercise price thereof shall be subject to adjustment in the manner set forth in
Section 4.2 of the Plan.

          8. Neither the adoption of the Plan nor the grant of this Option shall
be deemed to obligate the Company or any subsidiary to offer or continue
employment of the Optionee for any particular period, nor shall the granting of
this Option constitute a request or consent to postpone the retirement date of
the Optionee. Neither the Optionee nor any other person entitled to exercise the
Option under the terms hereof shall be, or have any of the rights or privileges
of, a shareholder of the Company in respect of any of the shares of Common Stock
issuable on exercise of this Option, unless and until this Option has been
exercised in accordance with its terms and the full purchase price for such
shares shall have been paid in accordance with the terms hereof.

          9. Whenever the Company is required to issue or transfer shares of
Common Stock to the Optionee under this Option, the Company shall have the right
to require the Optionee to remit to the Company an amount sufficient to satisfy
all federal, state and local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares as set forth in Section 15 of
the Plan.

          10. Notices given pursuant to this Option shall be in writing and
shall be deemed received when personally delivered (by messenger or courier) or
three (3) days after mailed by United States registered or certified mail,
return receipt requested, addressee only, postage prepaid. Notice to the Company
shall be directed to: Corporate Secretary, LodgeNet Entertainment

 

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Corporation, 3900 West Innovation Street, Sioux Falls, South Dakota 57107 or, if
different, the principal corporate offices of the Company. Notices to or with
respect to the Optionee shall be directed to the Optionee, or the executors,
personal representatives or distributees of a deceased Optionee, at the
Optionee’s home address on the records of the Company.

          11. This Option is subject to all the provisions of the Plan and its
provisions are hereby incorporated by reference and made a part of this Option,
and is further subject to all interpretations, amendments, rules and regulations
of the Plan Administrator which may from time to time be promulgated and adopted
pursuant to the Plan (including without limitation under the authority of the
Plan Administrator as set forth in Sections 3.2 and 17 thereof). In the event of
any conflict between the provisions of this Option and those of the Plan, the
provisions of the Plan shall control.

          12. The Company is not providing you with advice, warranties, or
representations regarding any of the legal or tax effects to you with respect to
this grant. You are encouraged to seek legal and tax advice from your own legal
and tax advisers as soon as possible.

          13. By accepting this grant and the shares of Common Stock covered
thereby, and by signing this instrument, you acknowledge that you are familiar
with the terms of the grant and the Plan, that you have been encouraged by the
Company to discuss the grant and the Plan with your own legal and tax advisers,
and that you agree to be bound by the terms of the grant and the Plan.

          14. THIS OPTION IS TO BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF
DELAWARE (WITHOUT GIVING EFFECT TO ANY LAWS OR RULES RELATING TO CONFLICTS OF
LAWS THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF DELAWARE).

     IN WITNESS WHEREOF, the Company has caused this Option to be duly executed,
as of the day and year first above written.

              LODGENET ENTERTAINMENT CORPORATION               BY:            

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    Name:   Scott C. Petersen     Title:   President & CEO

      ATTEST:           BY:        

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Name:   Daniel P. Johnson Title:   Secretary

 

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OPTION EXERCISE FORM

      To:   LodgeNet Entertainment Corporation     3900 West Innovation Street  
  Sioux Falls, SD 57107

          THE UNDERSIGNED, pursuant to the provisions set forth in the Option to
which this form is attached, hereby agrees to purchase          shares of Common
Stock covered by such Option, and makes payment herewith in full therefor at the
Exercise Price per share and in the manner set forth in said Option.

              Date:       Signature:        

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ACKNOWLEDGEMENT

The Undersigned:

               (a) Acknowledges receipt of the foregoing Option and understands
that all rights and liabilities with respect to this Option are set forth in the
Option and the Plan; and

               (b) Acknowledges that as of the date of grant of this Option, the
Option together with the Plan set forth the entire understanding between the
undersigned and the Company regarding the grant of options or acquisition of
stock in the Company and supersedes all prior oral and written agreements on
that subject.

OPTIONEE:

      Signature:        

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