exv10w22



 





Exhibit 10.22









Execution Copy




LODGENET INTERACTIVE CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT




     AGREEMENT, dated as of February 4, 2008, by and between LodgeNet Interactive Corporation, a
Delaware corporation located at 3900 West Innovation Street, Sioux Falls, South Dakota 57107
(“Corporation”), and Derek S. White (“Executive”).



     WHEREAS, the Executive is being offered employment by 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



     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 he commences employment
(“Commencement Date”) and continuing, unless sooner terminated as provided in Section 7 herein,
through December 31, 2008; provided, however, that on each December 31, commencing with 2008, 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 (“Notice of Non-renewal”) 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. Executive will report directly to the
Chief Executive Officer of the Corporation and will be a member of the Senior Management Team 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. It is understood and agreed that Executive will work a minimum of one day
a week from his home and that his commuting time will be considered daily work time. It is also
agreed that Executive will not be required to move to South Dakota.



     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 entitled 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. There will be an
annual performance-related cash bonus opportunity, at “target” equal to forty-five
percent (45%) of Executive’s Base Salary with an opportunity to earn up to
approximately eighty percent (80%) of Executive’s Base Salary, depending upon the
achievement of targets and objectives related to the performance of: (a) The Hotel
Networks (60% of the 45% — or 27% of Base Salary at target); and (b) the Corporation
(40% of the 45% — or 18% at target). The portion of Executive’s bonus related to The
Hotel Networks will be guaranteed and paid at “target” for 2008 and will be based on
the assumption that he was employed at the Corporation for eleven months this year.
	 
	 	(c)	 	As of the Commencement Date, Executive will also be awarded equity-based
incentives of LodgeNet Interactive common stock in the following forms: (a) an option
to acquire fifteen thousand (15,000) shares at a strike price equal to the FMV of the
stock on said day (the “Sign-on Option”), which option will vest 25% per year over four
years and will be issued in the form of an ISO; and (b) five thousand (5,000) shares of
time-based restricted stock (the “Sign-on Restricted Stock”), which will vest fifty
percent (50%) on the third anniversary of the grant and fifty percent (50%) on the
fourth anniversary.
	 
	 	(d)	 	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 Senior Vice Presidents;




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	 	(ii)	 	participate in LodgeNet’s executive benefits program, under
which program he will receive (a) the same medical, dental, life and vision
plan benefits on the same terms made available to other Senior Vice Presidents
of the Corporation, currently, the Company’s Option II Health, Dental, Life,
and Vision Plan without cost to him (a $750 deductible plan with an approximate
value of $900 per month), plus (b) $1,500 per month to subsidize certain
personal expenses, which will be structured in the most tax-efficient manner;
	 
	 	(iii)	 	participate in other non-duplicative benefit programs which
the Corporation may from time to time offer generally to executive personnel of
the Corporation; and
	 
	 	(iv)	 	accrue vacation time, sick leave, or other forms of paid time
off in accordance with the Corporation’s policy for executive personnel based
on four weeks of vacation time per annum, plus ten specified
Corporation-observed holidays.






	 	(e)	 	In order to closely align the interest of the Executive with creating
shareholder value at The Hotel Networks and for the Corporation, following the
completion of each of calendar years 2008, 2009, and 2010, the Corporation shall award
Executive shares of common stock of the Corporation equal to two (2%) percent of the
increase of the Net Equity Value, if any, of The Hotel Networks, Inc. over the Net
Equity Value of The Hotel Networks, Inc. determined as of the close of the preceding
calendar year (each such grant an “Annual Equity Grant” and collectively the “Annual
Equity Grants”). The increase in Net Equity Value over the preceding calendar year
shall be determined in accordance with the formula set forth in Appendix C below;
provided, however, that the Corporation shall have no obligation to issue such Annual
Equity Grant if Executive no longer serves as President of The Hotel Networks, Inc. as
of the end of the calendar year in question except as set forth in Section 8(b) and
8(c)(ii)(d) of this Agreement. One third of the Annual Equity Grant shall vest on the
date of the grant, and the remaining two thirds of the grant will be in the form of
Time-Based Restricted Stock which will vest in two equal installments, one half on the
first anniversary of the Annual Equity Grant and one half on the second anniversary of
the Annual Equity Grant. The determination of the amount of the Annual Equity Grant
shall be completed no later than thirty (30) days following the announcement by the
Corporation of its financial results for the calendar year in question. Except as
expressly set forth in this Agreement, the form of the Time-Based Restricted Stock
issued pursuant to this subparagraph (a) shall be the same as other Time-Based
Restricted Stock issued by the Corporation during the year of the grant to its senior
executives, and (b) such Time-Based Restricted Stock will be treated the same manner as
other grants of restricted stock in the event of a Change of Control in accordance with
Section 8(c)(ii)(c) below.





     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



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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:




	 	(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)	 	Termination by Executive. Executive may terminate his Employment with
the Corporation on not less than 60 days prior notice. Such termination shall not be
considered a breach of this Agreement.
	 
	 	(f)	 	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:




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	 	(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,
	 
	 	(iv)	 	if either party gives a Notice of Non-renewal, the effective
date of termination shall be the last day of the Term, and
	 
	 	(v)	 	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 or a
termination without Good Reason in accordance with Section 7(f) 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 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





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	 	 	 	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. Any unvested portion of the Sign-on Option, Sign-on
Restricted Stock, Annual Equity Grants or other equity award granted to Executive by the
Corporation shall become 100% vested and all restrictions shall be waived; in addition,
stock options shall remain exercisable for a period of one (1) year following the date
of termination. If the termination of the Executive occurs prior to December 31, 2010,
in addition to the Severance Payment, Executive shall be entitled to receive an amount
equal to the Annual Equity Grant for such year (the “Cash Equivalent Payment”), which
amount shall be determined by computing the Annual Equity Grant for the year in question
in the manner set forth in Appendix C. The Cash Equivalent Payment shall be paid in cash
on the date the Annual Equity Grant for the year in which Executive’s employment
hereunder is terminated would otherwise be issued. Executive shall have the right to
purchase health and dental coverage for himself and his dependents under the Company’s
group policies then in effect for the Severance Period. Following the Severance
Period, Executive may be entitled to benefit continuation under COBRA for the remaining
COBRA coverage 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 pursuant to Section 7(c).






	 	(c)	 	Termination Following Change in Control.






	 	(i)	 	If a Change in Control of the Corporation or The Hotel Networks,
Inc. 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 of the Corporation or The Hotel Networks,
Inc. (meaning that at the time of such termination the Company had 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:




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	 	(a)	 	Severance Payment. The Corporation
shall pay as severance pay to the Executive an amount equal to the Base
Salary that Executive would have received for a twenty-four (24) 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 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)	 	If the termination of the Executive occurs
prior to December 31, 2010, in addition to the Severance Payment,
Executive shall be entitled to receive an amount equal to the Annual
Equity Grant for such year (the “Cash Equivalent Payment”), which
amount shall be determined by computing the Annual Equity Grant for the
year in question in the manner set forth in Appendix C. The Cash
Equivalent Payment shall be paid in cash on the date the Annual Equity
Grant for the year in which Executive’s employment hereunder is
terminated would otherwise be issued.




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	 	(e)	 	Insurance and Welfare Benefits. During
the shorter of (i) the Payment Period or (ii) 18 months following the
date of termination (the “Coverage Period”) the Executive shall be
entitled to the continuation of the same or equivalent life, health,
hospitalization, dental and disability insurance coverage and other
employee insurance or welfare benefits that he had received (including
equivalent coverage for his spouse and dependent children) immediately
prior to the Change in Control. In the event that Executive is
ineligible under the terms of such insurance to continue to be so
covered, the Corporation shall provide the Executive with substantially
equivalent coverage through other sources. If the Executive prior to a
Change in Control was receiving any cash-in-lieu payments designed to
enable the Executive to obtain insurance coverage of his choosing, the
Corporation shall, in addition to any other benefits to be provided
under this Section 8(c)(ii)(d), provide Executive with a lump-sum
payment equal to the amount of such in-lieu payments that the Executive
would have been entitled to receive over the Coverage Period, no later
than the Last Payment Date. The benefits to be provided under this
Section 8(c)(ii)(d) shall be reduced to the extent of the receipt of
substantially equivalent coverage by the Executive from any successor
employer.
	 
	 	(f)	 	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




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	 	 	 	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.






	 	(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.



     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



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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
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 the
provision of television channels, video services, advertising targeting guests in
hotels, or broadband services to lodging or healthcare facilities in the United States
(a “Competing Business”); provided, however, that the parties acknowledge and agree an
entity involved in the cable, satellite or other pay television business generally
shall not be deemed to be a Competing Business if (i) the provision of video or
broadband services to lodging or healthcare facilities comprises less than twenty (20%)
percent of the revenues of such business or (ii) Executive’s principal duties do not
involve operation or oversight of that portion of the enterprise involved in the
provision of television channels, video services, advertising targeting guests in
hotels or broadband services to lodging or 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.




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     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 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 (d0 hereof.
The Administrator for purposes of this Agreement shall be the Corporation. The
Corporation shall have the right to designate one or more Corporation employees as the
Administrator at any




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	 	 	 	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 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




12









 






	 	 	 	an arbitrator in New York, NY, 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 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 Expenses. The Corporation shall pay Executive’s out-of-pocket
expenses, including attorneys’ fees, but not to exceed a total of $3,000 for review of this
Agreement and 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




13









 






	 	 	 	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 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)	 	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 Interactive Corporation
	 

	 	 	 	3900 West Innovation Street
	 

	 	 	 	Sioux Falls, SD 57107
	 

	 	 	 	Attn: General Counsel







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



14









 







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. The Corporation agrees that it will not,
without Executive’s prior written consent, take any action, or refrain from taking any action, that
would result in the imposition of tax, interest and/or penalties upon Executive under Code Section
409A, and that it will hold Executive harmless if any action it takes results in the imposition of
such tax, interest and/or penalties.



     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.



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



	 	 	 	 	 	 	 
	EXECUTIVE:	 	LODGENET INTERACTIVE
CORPORATION:
	 
	 	 	 	 	 	 
	/s/ Derek S. White	 	By:	 	/s/ Scott C. Petersen, President
	 	 	 	 	 
	 
	Address:

	 	10 Spring Oak Drive	 	 	 	 
	 

	 	Newtown, PA 18940	 	 	 	 






15









 






Appendix A




Employee Name: Derek S. White




	 	 	 
	Employee Address:

	 	10 Spring Oak Drive
	 

	 	Newtown, PA 18940
	 
	 	 
	Position/Title:

	 	Senior Vice President, LodgeNet Interactive Corporation.
	 

	 	President, The Hotel Networks, Inc.






Work Location: The Hotel Networks



Commencement of Employment: As mutually agreed upon between February 15 and March 1, 2008



Base Salary: $325,000 per annum



Benefits Stipend: $18,000 per annum, payable in monthly installments of $1,500.00



Bonus Parameters: a “target” equal to 45% of base salary with a maximum opportunity of 80% of base
salary. Of the 45% target, 27 percentage points will be based on the performance of The Hotel
Networks, Inc., and the remaining 18 percentage points will be based on the performance of the
Corporation as a whole.



Severance Period: 12 months



Time-Based Restricted Stock (separate agreement): 5,000 shares of the common stock of the
Corporation, 50% of which will vest on the third anniversary of the grant and 50% of which will
vest on the fourth anniversary of the grant.



Stock Options (separate agreement): an option, in the form of an ISO, to acquire 15,000 shares of
the common stock of the Corporation at a purchase price equal to the closing price of the Stock on
the date of the grant, which option will vest in four installments of 25% on the first, second,
third and fourth anniversaries of the grant.




16









 








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 with respect to the Corporation:





	 	(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




17









 












	 	(b)	 	during any period subsequent to the date of this Agreement, a majority
of the members of the Board shall not for any reason be the individuals who at
the beginning of such period constitute the Board or those persons who are
nominated as new directors by a majority of the current directors or their
successors who have been so nominated; 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.




A Change of Control will also be deemed to have occurred in the event the Corporation
ceases to own a majority of the voting stock of The Hotel Networks, Inc.



“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




18









 






	 	 	 	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;






	 	(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, as contemplated in Section 7(a) hereof.






     “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.



19









 





Appendix C




Formula for Calculating Increase in Equity Value of

The Hotel Networks, Inc.



For 2008:





	 	o	 	2008 THN Adjusted Operating Cash Flow (AOCF)
	 
	 	o	 	Times: LNET Trailing Twelve Month (TTM) Market Multiple for the preceding calendar
year (updated on an annual basis for future periods)
	 
	 	o	 	Equals: Gross Equity Value of THN
	 
	 	o	 	Less: Cumulative Capital Invested in THN by the Corporation since January 1, 2008
(which specific date is to be used for 2009 and 2010)
	 
	 	o	 	Equals: Increase in THN Net Equity Value for 2008
	 
	 	o	 	Times: Two Percent (2%)
	 
	 	o	 	Equals: THN Net Equity Value to be Converted into LNET Restricted Stock
	 
	 	o	 	Divided by: FMV of LNET Stock on March 1, 2009 (“Conversion Date”)
	 
	 	o	 	Equals: Number of LNET Restricted Shares to be Issued




Refer to Section 5(d) for terms and conditions of Restricted Stock.



For 2009 and 2010:




     The calculation will be the same as above with appropriate data adjustments to determine the
increase, if any, of Net Entity Value created in 2009 and 2010 over the prior year.



20









 





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.



     Anything herein to the contrary notwithstanding, Employee is not releasing (i) claims for
indemnification under the applicable by-laws of the Company or its affiliates or pursuant to its
directors’ and officers’ insurance policies or (ii) his right to enforce the Agreement to which
this release is attached.



     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)



21









 







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 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 and he may disclose
restrictive covenants to a potential employer. 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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